The parties may, however, decide to pass the risk before or after passing the property in the goods to the buyer.Let us take a look at an example. Regardless of the buyer or the seller bearing the risk, the duties and responsibilities of both of them as a bailee of goods for the other party, remain unaffected.Hence, we can say that under ordinary circumstances, the seller bears the risk until the property is passed to the buyer which also passes the risk to him. If the delay is due to a fault of the buyer, then the goods are at the buyer’s risk. In cases where the delivery has not been made, if the delay in delivery is due to the fault of the seller, then the risk lies with the seller. It holds true unless the buyer and seller have agreed to some other terms.
Solved Example on Passing of RiskQuestion: Peter agrees to sell 50 kilograms of potatoes to John to be delivered after 30 days. Hence, the risk was Peter’s and he will have to bear the loss.Learn the Auction sale here. In this case, the property had not passed to the bidder. He manages to get the highest bid of Rs 25,000.As he strikes the gavel to signify acceptance of the bid, he accidentally damages the watch. In a true auctioneer style, he manages to get a gavel (hammer used by auctioneers) and sets up a table inviting bids for the historical watch.
Consequently, the potatoes become unfit for use. Further, he does not answer any phone calls too. However, when Peter’s delivery boy goes to deliver the second lot, John is not available. This will make it easier for Peter to deliver the goodsJohn accepts the delivery on the first day.
‘The duties and liabilities of the seller or the buyer as bailee of goods for the other party remain unaffected even when the risk has passed generally. This is explicitly mentioned in Section 26. Since John defaulted on his promise of accepting the delivery, he will have to bear the loss.
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