Business Law Discussion 2022
Added on 2022-10-11
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Running head: BUSINESS LAW
BUSINESS LAW
Name of the Student
Name of the University
Author Note
BUSINESS LAW
Name of the Student
Name of the University
Author Note
1BUSINESS LAW
Introduction
A contract of sale, especially an international sale involves several kinds of risks, like
goods being lost or damaged during its travelling from one point to the other; from the
seller’s custody until it reaches the buyer. Goods may be lost or get damaged while it is with
the seller before it is being handed over to the shipping or Courier company, while loading or
unloading the goods by the courier company or when the goods reaches the buyer’s premise.
Such damage or lost may occur due to various incidents. Nevertheless, not all damage or loss
does not attract the rules of the regulations related to passage of risk. The term ‘risk’ refers to
any incident that may cause damage, physical destruction or deterioration of the goods. Risks
that are involved in the carriage of goods is covered by the provisions of Convention on
Contracts for the International Sale of Goods or Vienna Convention 1980 and the Sale of
Goods Act which discusses the risks that goods may be open to, like deterioration, physical
damage, or goods getting lost1.
In this regard, a detailed discussion on the concept of risk and the passage of risk in
international contract of sale is vital. The paper would strive to talk about the passage of risk
in relation to the Convention on Contracts for the International Sale of Goods (CISG) or the
Vienna convention, Incoterms 2010 and the English common law. In addition, a demarcation
between the three conditions would also be highlighted.
The concept of risk
The term ‘risk’ refers to any incident that may cause damage, physical destruction or
deterioration of the goods. Risk is the accidental injury that is caused to the goods while they
are being carried by the courier or shipping company or the. Risk may involve damage,
destruction, deterioration, seizure or theft of goods that might take place while it is with the
seller or in transit with the shipping company or after it has been received by the buyer.
1 Alazemi, Essa. "Passing of Risk in International Contracts of Sale of Goods; A Comparative Study Between
the United Nations Convention on Contracts for Sale of Goods 1980 and the English Sale of Goods Act 1979."
(2010).
Introduction
A contract of sale, especially an international sale involves several kinds of risks, like
goods being lost or damaged during its travelling from one point to the other; from the
seller’s custody until it reaches the buyer. Goods may be lost or get damaged while it is with
the seller before it is being handed over to the shipping or Courier company, while loading or
unloading the goods by the courier company or when the goods reaches the buyer’s premise.
Such damage or lost may occur due to various incidents. Nevertheless, not all damage or loss
does not attract the rules of the regulations related to passage of risk. The term ‘risk’ refers to
any incident that may cause damage, physical destruction or deterioration of the goods. Risks
that are involved in the carriage of goods is covered by the provisions of Convention on
Contracts for the International Sale of Goods or Vienna Convention 1980 and the Sale of
Goods Act which discusses the risks that goods may be open to, like deterioration, physical
damage, or goods getting lost1.
In this regard, a detailed discussion on the concept of risk and the passage of risk in
international contract of sale is vital. The paper would strive to talk about the passage of risk
in relation to the Convention on Contracts for the International Sale of Goods (CISG) or the
Vienna convention, Incoterms 2010 and the English common law. In addition, a demarcation
between the three conditions would also be highlighted.
The concept of risk
The term ‘risk’ refers to any incident that may cause damage, physical destruction or
deterioration of the goods. Risk is the accidental injury that is caused to the goods while they
are being carried by the courier or shipping company or the. Risk may involve damage,
destruction, deterioration, seizure or theft of goods that might take place while it is with the
seller or in transit with the shipping company or after it has been received by the buyer.
1 Alazemi, Essa. "Passing of Risk in International Contracts of Sale of Goods; A Comparative Study Between
the United Nations Convention on Contracts for Sale of Goods 1980 and the English Sale of Goods Act 1979."
(2010).
2BUSINESS LAW
Goods may be lost or get damaged while it is with the seller before it is being handed over to
the shipping or courier company, while loading or unloading the goods by the courier
company, in case of sinking of the ship or carrier vehicle, warehouse fire, injury effected by a
third party or when the goods reaches the buyer’s premise. Such damage or lost may occur
due to various incidents. Nevertheless, not all damage or loss does not attract the rules of the
regulations related to passage of risk2.
The most substantial provision in respect to the passage of risk in international sale of
goods is Article 66 of the CISG which discusses the obligation of the buyer after the risk has
passed to him3. It holds the buyer liable to pay the price of the goods after the risk has passed
onto him as and when the goods has been delivered to him, irrespective of the fact whether
the goods is damaged or not. However such the buyer shall not be held liable for paying the
price in case the goods was lost or damaged by the seller. Similarly, Section 20 of the Sale of
Goods Act 1979 states that the liability of risk of the seller passes onto the buyer as per
agreement as and when the goods is beyond the control of the seller4. Risk is, therefore, the
events that results to damage or destruction of the goods that is involved in the contract of
sale between the buyer and seller. The notion of passage or risk depends upon the principles
of vis major or casus fortuitus. When goods are being carried over a long distance by sea, it
could affect the condition of the goods, thereby jeopardizing the position of the seller. This is
how the risk of the parties are calculated, by determining as to when and where the los had
occurred. Therefore, by the provisions of the regulation of international contract of sale, the
risk of the goods shall be upon the buyer once the goods has been passed to him, or when the
goods has gone out of the control of the seller, or as agreed between the parties.
The principle aspect on which a risk becomes a concern is to determine as to whether
the buyer shall be made liable to pay the price of the goods, lost or damaged. This is regarded
2
3 United Nations Convention on Contracts for the International Sale of Goods, art 66.
4 Sale of Goods Act 1979, s 20.
Goods may be lost or get damaged while it is with the seller before it is being handed over to
the shipping or courier company, while loading or unloading the goods by the courier
company, in case of sinking of the ship or carrier vehicle, warehouse fire, injury effected by a
third party or when the goods reaches the buyer’s premise. Such damage or lost may occur
due to various incidents. Nevertheless, not all damage or loss does not attract the rules of the
regulations related to passage of risk2.
The most substantial provision in respect to the passage of risk in international sale of
goods is Article 66 of the CISG which discusses the obligation of the buyer after the risk has
passed to him3. It holds the buyer liable to pay the price of the goods after the risk has passed
onto him as and when the goods has been delivered to him, irrespective of the fact whether
the goods is damaged or not. However such the buyer shall not be held liable for paying the
price in case the goods was lost or damaged by the seller. Similarly, Section 20 of the Sale of
Goods Act 1979 states that the liability of risk of the seller passes onto the buyer as per
agreement as and when the goods is beyond the control of the seller4. Risk is, therefore, the
events that results to damage or destruction of the goods that is involved in the contract of
sale between the buyer and seller. The notion of passage or risk depends upon the principles
of vis major or casus fortuitus. When goods are being carried over a long distance by sea, it
could affect the condition of the goods, thereby jeopardizing the position of the seller. This is
how the risk of the parties are calculated, by determining as to when and where the los had
occurred. Therefore, by the provisions of the regulation of international contract of sale, the
risk of the goods shall be upon the buyer once the goods has been passed to him, or when the
goods has gone out of the control of the seller, or as agreed between the parties.
The principle aspect on which a risk becomes a concern is to determine as to whether
the buyer shall be made liable to pay the price of the goods, lost or damaged. This is regarded
2
3 United Nations Convention on Contracts for the International Sale of Goods, art 66.
4 Sale of Goods Act 1979, s 20.
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