Effects of Destruction of Subject Matter in goods sale
Sections 7 and 8 of the Sale of Goods Act 1930 deal with the effect of perishing of goods on the rights and obligations of the parties to a contract of sale. Goods are said to perish when they physically or commercially cease to exist before and after the contract. The effect of perishing of goods may be discussed under the following heads:
1. Goods Perishing before Making of the Contract
(Sec. 7) According to Sec. 7 of the Act, “Where there is a contract for the sale of specific goods, the contract is void if the goods without the knowledge of the seller have, at the time when the contract was made perished or become so damaged as no longer to answer to their description in the contract.” Where specific goods form the subject matter of a contract of sale and they without the knowledge of the seller perish, at or before the time of the contract, the contract is void. This provision is based on the ground of mutual mistake or impossibility of performance.
Where in a contract for the sale of specific goods,
only part of the goods are destroyed or damaged, the effect of perishing will depend upon whether the contract is entire or divisible. If it is entire (indivisible) and part only of the goods has perished, the contract is void. If the contract is
divisible, it will not be void and the part available in good condition must be accepted by the buyer
Example: A agrees to sell B, a specific cargo sup-
posed to be on its way from England to Bombay. It turns out before the day of the bargain the ship carrying the cargo has been cast away and the goods lost. Neither party was aware
of the facts. The agreements is void.
To make a contract void under this section, the following conditions must be fulfilled:
The contract must be for the sale of specific goods. The goods must have been perished before the contract is made.
2. Goods Perishing before sale but after Agreement to Sell (Sec. 8) Sec. 8 of Sale of Goods Act reads as “Where there is an agreement to sell specific goods, and subse-
quently the goods, without any fault on the part of the seller or buyer, perish or become so damaged as no longer to answer to their description in the agreement before the risk passes to the buyer, the agreement is thereby avoided”. In such cases, the contract of sale becomes void if the contract
is for the sale of specific goods and the goods are destroyed without any fault of the seller or buyer. This provision is based on the ground of supervening impossibility of per-
formance which makes a contract void.
If only part of the goods agreed to be sold perish, the contract becomes void if it is indivisible. But if it is divisible then the parties are absolved from their obligations only to the extent of perishing of the goods, that is, the contract remains valid as regards the part available in good condition.
A.The contract should be for specific goods and not for unascertained goods.
B.The seller must not have the knowledge of the destruction of the goods.
C.The goods must have been perished without the fault of seller or buyer.
D.The goods must have perished or damaged before the property or the risk passes to the buyer.
Sometimes, the risk has passed to the buyer at the time of the contract i.e., the buyer has expressly or impliedly undertaken to suffer the loss of the goods. In such cases,the buyer will be liable to pay the damages to the seller for the loss of the goods even if the goods have not been delivered to him.
Sections 7 and 8 apply only to specific goods. If the contract is for “unascertained goods’ then the contract shall not become void even if the entire stock of goods is destroyed. And the parties remain liable to fulfil their obligations.
Under Sec. 7, the contract is void ab initio and the
parties are discharged from their liabilities to perform the contract. On the other hand, Sec. 8.