Sales of Goods Act- Effect of Perishing Goods

Effects of perishing Goods

Assume, you have contract to buy horse from Mr Mallya. You made a contract. Now at the time of making contract, Horse died in stable which Mr Mallya don't know. Now what ? Will you get money back ? Will Mr Mallya get money because he didn't know whether Horse died or not ?


These questions are answered in section 7.

Section 7 states as below
Where there is a contract for sale of specific goods, the contract is void if the goods without the knowledge of the seller have at the time when the contract was made, perished or become so damaged as no longer to answer to their description in the contract

When subject matter of contract is destroyed, performance of contract becomes impossible and hence contract becomes void. In above example, you have selected horse, but it died without the fault of seller and he cannot bring that horse back to life.

Similarly say you ordered 1 ton of Bananas. Monkey had destroyed Bananas beyond recognition or to which they don't answer the description that they are Banana, in this case too contract will be void.

Take another example of Contract of Selling 100 bags of sugar. If there is heavy rain and water logged in godown, suger will be destroyed, in this case also contract will be void.

In these scenarios if any party received any benefit, it has to be restored.

Section 8 

It deals with agreement to sell. In agreement to sell, parties agree for delivery in future. In such cases if subject matter is destroyed without any fault of seller or buyer, contract can be voided. 

Where there is an agreement to sell specific goods, and subsequently the goods without any fault on the part of the seller or buyer perish or become so damaged as no longer to answer to their description in the agreement before the risk passes to the buyer, the agreement is thereby avoided.


So to conclude, if subject matter or goods get perished, contract is void if contract is in specific goods, it's voidable if it's in future good or in case of agreement to sell.


Legalfundaa

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