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CA Foundation · Business Laws · The Sale of Goods Act, 1930

Sunita sells 100 kg of tea lying in a godown to Farhan, who pays the price. The tea is part of a larger stock of 500 kg of the same quality, and the 100 kg has not been separated. Before separation, a fire destroys the whole stock without any fault of either party. Who bears the loss on Farhan's 100 kg?

Sunita bears the loss. The 100 kg was never separated from the larger stock, so the goods were unascertained and property had not passed. Risk generally goes with property, so the seller suffers, and Farhan's payment of price does not change this.

  1. AFarhan, because he paid the price
  2. BFarhan, because risk follows possession
  3. CSunita, because property has not passed to Farhan as the goods are unascertainedCorrect
  4. DBoth equally, since the fire was an accident

Explanation

Where goods sold are unascertained, property does not pass until the goods are ascertained. The 100 kg was not separated from the bulk, so property remained with Sunita. Risk prima facie follows property, so Sunita bears the loss. Payment of price alone does not pass property.

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