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ACCA Applied Skills · Corporate and Business Law (Global) · Obligations of the seller and buyer, and provisions common to both

Under the CISG, a buyer, Kestrel Co, was required to collect goods from the seller's warehouse on 1 March. Kestrel Co failed to collect them and the seller left them in the warehouse. The goods were destroyed by an accidental fire on 10 March, with no fault by the seller. Who bears the risk of the loss?

The buyer bears the loss. Where goods are collected from the seller's premises, risk passes when they are placed at the buyer's disposal and the buyer breaches by failing to take them over in due time. Possession by the seller does not keep risk with the seller.

  1. AThe seller, because the goods remained in its possession
  2. BThe buyer, because risk passed when the goods were placed at its disposal and it failed to take them over in timeCorrect
  3. CThe loss is shared equally because neither party was at fault

Explanation

Where goods are to be taken over at the seller's place of business, risk passes when the buyer takes them over, or, if the buyer fails to do so in due time, from when the goods are placed at its disposal and it commits a breach by not taking delivery. Kestrel's failure to collect therefore shifts risk to it. There is no rule of equal sharing.

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