Question 3
Risk passes with property; seller who extended credit; lien and stoppage in transit
18.75 marks
- Time to write
- About 38 minutes
From an older CBCS paper
Question
Question 3 · 18.75 marks“In a contract of Sale of Goods, “Prima facie, risk passes with property”. Comment.
On 15th February 2021, A sold goods to B on 30 days credit. B does not pay on the date scheduled, but A extends the credit period to 30th March 2021. What rights A has against B.Would the answer differ if A does not extend the credit period. In light of this, bring out how the Right of Lien differs from the Right of Stoppage of goods in-transit.
Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- CommentA statement to judge: take a stand on it in your first line, and come back to it at the end.
- differs fromSet the differences out in a table, basis by basis, not as two separate essays.
What the paper leaves open
The paper prints no mark per question (any four of six, equal marks, 75 in all); each question is reckoned here at 18.75 marks. The opening quotation mark is printed twice (“In a contract..., “Risk...”); read as one quotation.
Write it in this order
- Read; underline the asks; jot your points 2 min
- 1 Risk passes with property 5 marks 9 min
- 2 A's rights: credit extended and not extended 7.8 marks 14 min
- 3 Lien and stoppage distinguished 6 marks 11 min
- Check: every ask answered, key terms underlined 2 min
Short on time? Trim steps 1–3 evenly rather than skip one: each is capped at its own marks.
Try it first. About 38 minutes for 18.75 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
Risk prima facie passes with property. The general rule is that risk passes with the property: where goods are lost or damaged, the burden of the loss falls on whoever is the owner at the time, and if the property has passed to the buyer the risk is his, though the goods may still be in the seller's possession. "Prima facie" means the parties may agree otherwise, and a party at fault in delivery bears the loss caused by his delay.
A's rights against B. A seller is unpaid when he has not received, or been offered, the full price and can sue for it at once; such a seller may hold the goods for the price as long as he has them in his possession (lien), a right of stopping them in transit if the buyer is insolvent, and a right of resale as limited by the Act (ss. 45, 46).
- A extends the credit to 30th March 2021. While the extended credit runs, A has no immediate right of action for the price. A lien arises where goods are sold without credit, where the credit has expired, or where the buyer becomes insolvent (s. 47): so, unless B becomes insolvent in the meantime, A has no lien during the extended credit. If the goods are still in his possession when that credit expires unpaid, his lien revives, with the other rights of an unpaid seller.
- A does not extend the credit. When the 30 days expire unpaid, A is an unpaid seller with an immediate right of action: he may retain the goods if still in his possession (lien), stop them in transit if B becomes insolvent, resell them as the Act permits, and sue B for the price.
| Basis | Lien | Stoppage in transit |
|---|---|---|
| Possession | The seller must be in possession | The seller has parted with possession; the goods are in transit |
| Nature | Right to retain possession | Right to regain possession |
| Buyer's insolvency | Not needed | Needed |
| When | Ends when the goods leave the seller | Begins where the lien ends |
Where the 18.75 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Risk passes with property | 5 |
| 2 | A's rights: credit extended and not extended | 7.75 |
| 3 | Lien and stoppage distinguished | 6 |
| Total | 18.75 |
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