The passing of ownership and risk 183of SGA 1979 was explained on p. 102 in Chapter 3. The ways in which goods can be deliv-
ered are considered later in this chapter.
If risk has passed from the seller to the buyer at the time when the goods become lost or
damaged, the position is straightforward. The loss will fall upon the buyer, who will have
to pay the full price of the goods (if the price has not already been paid).
If risk has not passed to the buyer at the time when the goods become lost or damaged,
then the loss will fall upon the seller. However, the legal position will then depend upon
whether the contract was for the sale of specific or unascertained goods. Specific goods are
defined by s. 61 of the Act as goods which have been identified and agreed upon at the time
of sale. For example, if a second-hand car is sold, this is a sale of specific goods because only
the particular car identified and agreed upon can be delivered in performance of the con-
tract. Unascertained goods are goods which have not been identified and agreed upon at
the time of sale. For example, if 100 tonnes of wheat are sold, and the buyer and seller have
not identified any particular 100 tonnes of wheat as the subject matter of the contract, this
is a sale of unascertained goods. The seller’s obligation is to deliver any 100 tonnes of wheat
which match the contract description.
If specific goods are lost or damaged before risk has passed to the buyer, the seller is in
breach of contract. Obviously, the seller cannot deliver lost goods. Nor can the seller deliver
damaged goods because the buyer will be entitled to reject these goods on account of their
being of unsatisfactory quality. Therefore, the buyer will not need to pay the price and
accept the damaged goods. If the buyer has already paid some of the price of lost or damaged
goods, the seller will have to refund the amount paid. The buyer will also be able to sue the
seller for damages for non-delivery. In practice, a buyer might choose to accept damaged
goods, but at a much reduced price. The strength of the buyer’s legal position would put
strong pressure on the seller to accept the reduced price.
If unascertained goods are lost or damaged before risk has passed to the buyer then the
legal position will be the same if the seller cannot find replacement goods which match the
contract description. However, the seller could still properly perform the contract by acquir-
ing other goods which match the contract description and by delivering these goods to the
buyer. A seller who does this will not be in breach of contract. The buyer will therefore have
to accept the goods and pay the full price.
Example
Bill agrees to buy a two-year-old lorry (specific goods) from Sajjid for £12,000, and pays a
deposit of £2,000. The lorry is damaged by vandals before risk has passed to Bill. Bill need
not accept the damaged lorry because it is not of satisfactory quality. Bill has a right to sue
Sajjid for damages for non-delivery and need not pay the £10,000 which has not yet been
paid. Bill can also recover the £2,000 which has been paid.Example
Bill agrees to buy 1,000 barrels of oil (unascertained goods) from Sajjid. While Sajjid still has
ownership of 1,000 barrels of oil which he intended to supply to Bill, the oil is destroyed in
a fire. If Sajjid can acquire another 1,000 barrels of the same type of oil before the date
of delivery is due, then Sajjid can deliver this oil to Bill, who must accept it and pay the full
contract price. If Sajjid cannot acquire another 1,000 barrels of the same type of oil before
delivery is due, then Sajjid is in breach of contract. Bill need not pay the price and can recover
any amount of the price already paid. Bill can also sue Sajjid for damages for non-delivery.