Law of commerce
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 in a scale of goods transaction.
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
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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 occurs 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 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.
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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