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Exceptions to the rule- Risk passes with ownership

Under the following cases risk will pass at different time from the time when the ownership passes.
  • Delayed delivery: Sometimes, the delivery of the goods is delayed due to the fault of either the seller or the buyer. In such a case, the goods are at the risk of the party at fault with regard to any loss which might have occurred. However, the defaulting party shall suffer the loss which has occurred due to such delayed delivery of the goods though the ownership is with the other party.

If under a contract of sale of goods, the property had passed to the buyer, but the seller desired to keep the goods for a few days, and in the meantime, the goods were damaged in a fire accident in the seller’s store house, the seller would bear the loss although property in goods had been transferred to the buyer, because this loss would not have taken place, had the seller not delayed the delivery.

  • Agreement between parties: The parties to a contract are free to fix any term regarding the burden of loss in goods which may be different from the general rule. By agreement, the parties may decide that ‘risk’ will pass before or after passing of property.

Arun sold certain goods to Varun to be delivered to him at his place. According to the terms of the contract, the goods were to remain the property of the seller till the price was paid though the risk was to pass to the buyer when they were delivered to public carrier. During transportation, the goods were destroyed by an accident. In this case, the risk shall pass according to the terms of the agreement between the parties. Thus, Varun will suffer the loss of the goods though the ownership of the goods is with Arun.

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