Transfer of risk and transfer of ownership (part 1)

According to Elphick v Barnes, the ‘risk’ concerning in Commercial contract means the risk of deterioration of or damage to the goods, and it includes accidental damage and damage caused by third party. The transfer of such risk generally transfers along with the property ownership. Section 20 (1) of Sale of Goods Act 1979 provides the law governing the transfer of risk. It states that, ‘unless otherwise agreed, the goods remain at the seller’s risk until the property in them is transferred to the buyer the goods are at the buyer’s risk whether delivery has been made or not’.

However, section 20 (1) will apply only if the contracting parties did not expressly agree as to when the transfer of ownership will occur.

It seems that the transfer of ownership is closely relevant to the transfer of risk. On the other hand, depending on the classification of the goods, the transfer of ownership is made. Different laws govern the transfer of such goods, whether specific, unascertained or ascertained.

Details of these classification and the laws will be discussed in my later post.