Section 26 of The Sale of Goods Act, 1930
Risk prima facie passes with property.
Unless otherwise agreed, the goods remain at the seller's risk until the property therein is transferred to the buyer, but when the property therein is transferred to the buyer, the goods are at the buyer's risk whether delivery has been made or not: Provided that, where delivery has been delayed through the fault of either buyer or seller, the goods are at the risk of the party in fault as regards any loss which might not have occurred but for such fault: Provided also that nothing in this section shall affect the duties or liabilities of either seller or buyer as a bailee of the goods of the other party.
Summary
- The risk of loss or damage to goods generally follows whoever owns them, regardless of who is holding them.
- Until ownership (property) is transferred to the buyer, the seller carries the risk.
- Once ownership moves to the buyer, the buyer carries the risk even if the goods have not been delivered yet.
- If a delay in delivery is caused by one person's fault, that person bears the risk for any loss that happened because of the delay.
- The rules about risk do not change the legal responsibilities of a person acting as a bailee (someone holding goods for someone else).
- These rules only apply if the buyer and seller have not agreed to a different arrangement in their contract.
Practical examples
FAQ
1. Who is responsible if goods are destroyed before delivery under The Sale of Goods Act, 1930, Section 26?
Under Section 26 of The Sale of Goods Act, 1930, the person who holds the property (ownership) of the goods is generally responsible for the risk, even if the goods have not been delivered to the buyer yet.
2. Does the risk always stay with the seller until the buyer receives the goods under The Sale of Goods Act, 1930, Section 26?
No, under Section 26 of The Sale of Goods Act, 1930, risk is tied to ownership rather than possession, so the risk passes to the buyer as soon as ownership transfers, unless the parties agreed otherwise.
3. What happens if a seller fails to deliver on time and the goods are damaged under The Sale of Goods Act, 1930, Section 26?
According to Section 26 of The Sale of Goods Act, 1930, if delivery is delayed due to the seller's fault, the seller must bear the risk for any loss that would not have occurred if the delivery had happened on time.
4. Does being an owner mean you cannot hold the other party responsible for negligence under The Sale of Goods Act, 1930, Section 26?
Even if you are the owner and bear the risk, Section 26 of The Sale of Goods Act, 1930, states that the other party still has the duties and liabilities of a bailee, meaning they must take reasonable care of your goods while holding them.
Test yourself
Q1.Under Section 26 of The Sale of Goods Act, 1930, when does the risk of loss generally pass to the buyer?
Q2.According to Section 26 of The Sale of Goods Act, 1930, what is the consequence of a fault-based delay in delivery?
Q3.How does Section 26 of The Sale of Goods Act, 1930, interact with the concept of a bailee?
Q4.Under Section 26 of The Sale of Goods Act, 1930, which party bears the risk if ownership has not yet passed and there is no fault?