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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 UN Convention on Contracts for the International Sale of Goods (CISG), a seller in Country A agrees to sell machinery to a buyer in Country B. The contract says nothing about risk and does not require the seller to hand the goods to a particular place. The seller hands the goods to the first independent carrier for transport to the buyer. When does risk pass to the buyer?

Risk passes to the buyer when the goods are handed to the first carrier for transmission to the buyer. This is the CISG default for contracts involving carriage where no particular place of handover is named. Arrival or payment is irrelevant to the passing of risk.

  1. AWhen the goods are handed to the first carrier for transmission to the buyerCorrect
  2. BWhen the goods arrive at the buyer's premises
  3. CWhen the buyer pays the price in full

Explanation

Where the contract involves carriage and no particular place for handover is specified, risk passes when the goods are handed over to the first carrier. Delivery at the buyer's premises would apply only if agreed. Payment does not determine the passing of risk.

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