Brian is closing down his electrical wholesale business. Amongst the stock remaining in his warehouse are 400 television sets. He agrees to sell 300 of these televisions to Ian (a fellow wholesaler) who pays for them in full by cheque and agrees to collect them the following week. Ian was busy the following week and didn’t get round to collect them until the end of the following month. Unfortunately, the day before Ian went to collect the televisions, Brian’s warehouse was broken into and 200 of the televisions were stolen. Brian cannot obtain any more stock but offers Ian delivery of the remaining 200 televisions.

Advise Ian.

Answer

In this answer, you will need to consider the rules relating to when property in the televisions passes to Ian as well as the question of risk.

When does property pass?

First, consider whether the goods are specific goods. If both parties have identified and agreed upon precisely which of the televisions are to be sold under the contract, then they will be specific goods (s 61(1) SGA 1979).

You should first apply s 17(1) SGA which provides that property in specific or ascertained goods will transfer to the buyer when the parties to the contract intend it to pass. For the purpose of ascertaining the intention of the parties, regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case (s 17 (2)).

Where the parties fail to make clear their intentions as to when property in the goods will be transferred to the buyer, you will need to consider the Rules contained in s 18. These provide the rules for ascertaining the intention of the parties. Rule 1 states that where there is an unconditional contract for the sale of specific goods in a deliverable state, property in the goods passes to the buyer when the contract is made. This is irrespective of whether the time of payment or the time of delivery, or both, are postponed. Therefore, the property in the televisions passed to Ian as soon as the contract was made.

Risk?

The question tells us that Ian agreed to collect the televisions the following week but because Ian was busy, he didn’t get round to collecting them until the end of the following month by which time they had been stolen. You will therefore need to consider who has the risk in the goods. Unless otherwise agreed between the parties, the goods remain at the seller's risk until the property in them is transferred to the buyer.

When the property in them is transferred to the buyer the goods are at the buyer's risk whether delivery has been made or not (s 20(1) SGA). Therefore, as property in the televisions passed to Ian as soon as the contract was made, they are at Ian’s risk, and he suffers the loss.