Risk Transfer to the Buyer in the sale of Goods Order Instructions: explain when risk transfers to the buyer in a sale of goods transaction and explain the exceptions to the rule.

explain when title transfers to the buyer on a scale of goods transaction.

Risk Transfer to the Buyer in the sale of Goods Sample Answer

Introduction

The general principles of the law of contract such as the laws relating to acceptance, offer, and consideration among others that also apply to the sale of goods contract and both the seller and the buyer are allowed to agree freely on the terms that will govern their relationship. The sale of goods act outlines the terms that are intended to protect both parties in cases where contingencies are not provided for and which may interfere with the performance of the contract such as destruction of goods before they are actually delivered. The contract for the sale of goods refers to the transfers of the property in goods by the seller to the buyer in exchange of money consideration known as the price (Hare, 2003).

The property in the goods passes to the buyer in the contract of sale at the time the contract is being made.

The general rule on transfer of risks is that unless the parties to the sale of goods contract have agreed otherwise, the transfer of risks to the buyer occur when the properties in the goods have been transferred to the buyer. For example, the risk of loss passes prima facie also with the property in the goods.  The goods remain at the sellers’ risks until the properties in the goods are transferred to the buyer then the buyer assumes the risks.  Hence in case of a sale agreement and the goods are destroyed, the buyer will bore the risk even though he may not have taken possession of the goods i.e. the goods may still be in the possession of the buyer.  But in case of a contract of an agreement to sell, the risks will be borne by the seller even though the possession of the goods may have passed to the buyer as in the case of  Demby Hamilton & Co. Ltd V. Barden (1949) 1 Aller 435 B

The exceptions to the rule occur only when there are exemption clauses that have been agreed upon by both parties as in the case of L’Estrange V Grautob (1934) 2 K.B. 688. Also, the general rule on the advertisement is an exception to the general rule of sales of goods.

The property in the goods is transferred to the buyer after he has met all the terms of the contract, for example, after the payment for the goods in full, and the buyer has fulfilled all the conditions required under the sale of goods act.

Risk Transfer to the Buyer in the sale of Goods References

Demby Hamilton & Co. Ltd V. Barden (1949) 1 Aller 435 B

Hare, J. C. (2003) The Law of Contracts. Clark, N.J.: Lawbook Exchange.

L’Estrange V Grautob (1934) 2 K.B. 688