Skip to content

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

Under the CISG, Rhine Co sold 100 identical crates of components to Sable Co, to be shipped by carrier. Rhine Co handed 100 crates to the carrier but did not mark them with Sable Co's name, did not send a shipping notice and did not otherwise identify them to the contract. The crates were then lost at sea in a storm. Rhine Co argues that risk had passed on handover to the carrier. What is the position?

Rhine Co bears the loss. Under the CISG, risk does not pass to the buyer until the goods are clearly identified to the contract by markings, shipping documents or notice. Handing unidentified crates to the carrier is not enough to transfer risk.

  1. ARisk passed on handover to the carrier, so Sable Co bears the loss
  2. BRisk did not pass because the goods were not clearly identified to the contract, so Rhine Co bears the lossCorrect
  3. CRisk passed only when Sable Co accepted the goods after inspection

Explanation

Risk does not pass to the buyer until the goods are clearly identified to the contract, for example by markings on the goods, shipping documents or notice to the buyer. Handover to the carrier alone is insufficient where identification is missing. Acceptance after inspection is not the test.

Did you get it right without looking?

One question tells you little. A timed set on Obligations of the seller and buyer, and provisions common to both shows your real accuracy, how long you take and where you lose marks.

Practise Obligations of the seller and buyer, and provisions common to bothFree diagnostic mock

More Obligations of the seller and buyer, and provisions common to both questions