26. A sells to B a horse and agrees to deliver it the coming week. B agreed to pay the price on delivery. But the horse died before it is delivered. Who has to suffer the loss?

1. Facts of the Case

• A agrees to sell a horse to B, with delivery scheduled for the coming week.
• B agrees to pay the price on delivery of the horse.
• Before delivery, the horse dies due to unforeseen circumstances.
• The issue is to determine who bears the loss under the Indian Contract Act and Sale of Goods Act, 1930.

2. Issues in the Case

1. Whether A or B bears the risk for the loss of the horse before delivery.
2. Whether the death of the horse amounts to frustration of contract.
3. Which provisions of the Sale of Goods Act, 1930 and Indian Contract Act, 1872 apply.
4. Whether ownership (property) had passed to B at the time of death.

3. Legal Principles Covered

a) Sale of Goods Act, 1930 – Risk and Property

• Section 18: Transfer of property (ownership) in goods generally passes from seller to buyer when parties intend.
• Section 26: Risk follows ownership only if ownership has passed. “Unless otherwise agreed, the goods remain at the seller’s risk until property passes to the buyer.”

Application:

• Here, the contract specifies payment on delivery.
• Ownership (property) in the horse passes to B only on delivery.
• Until delivery, the horse remains A’s property, and the risk is borne by A.

b) Death of Specific Goods (Section 6 & 7, Sale of Goods Act)

• Section 6: Contract for the sale of specific goods that are destroyed before ownership passes is avoided.
• Section 7: When goods perish before the risk passes, the seller bears the loss.

Explanation:

• The horse is specific goods, not generic.
• It died before delivery and before property passed to B.
• Therefore, A suffers the loss as the risk had not passed.

c) Related Principles

• Section 32: Payment is due on delivery, not before.
• Section 32 Explanation: Since ownership had not passed, B is not obliged to pay.

Illustrative Case Laws:

1. Cundy v. Lindsay (1878) 3 App Cas 459 – If the specific subject matter of the contract perishes before ownership passes, the contract is automatically void.
2. S. A. Qureshi v. Mohd. Iqbal, AIR 1962 Lah 121 – Loss of specific goods before delivery and property passing is borne by seller.

4. Possible Judgement

• Since the horse died before delivery, the property (ownership) had not passed to B.
• Under Section 26 and Section 7 of the Sale of Goods Act, the risk is with A, the seller, until delivery.
• Therefore, A must bear the loss.
• B is not obliged to pay anything for the horse, as payment was to be made on delivery, and the contract cannot be performed due to the perishing of specific goods.

Judgement: A suffers the loss; B does not have to pay the price. The contract is avoided due to destruction of specific goods before ownership transfer.

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