54. ‘B’ selects certain furniture in a shop. The price is settled. ‘B’ arranges to take delivery of the furniture on the next day and agrees to pay the price on the first day of the next month. The furniture was destroyed by fire in the same evening, is ‘B’ liable to pay ‘price, to seller?

1. Facts of the Case

• ‘B’, a customer, visits a furniture shop and selects certain items of furniture.
• The price of the selected furniture is agreed upon and settled between ‘B’ and the seller.
• The parties agree that:
  • Delivery will be made the next day, and
  • Payment will be made on the first day of the next month.
• However, on the same evening, before the delivery was made, the furniture was destroyed by fire without fault of either party.
• The seller demands payment, but ‘B’ refuses, claiming that property (ownership) had not yet passed to him.
• The issue arises — whether ‘B’ is liable to pay the price of the furniture even though it was destroyed before delivery.

2. Issues in the Case

1. Whether the property in the goods had passed from the seller to the buyer before the goods were destroyed.
2. Whether the risk of loss passes with the ownership of goods under the Sale of Goods Act, 1930.
3. Whether, in this situation, ‘B’ is liable to pay for the furniture destroyed by accident before delivery.
4. Whether the agreement to sell had become a sale, or it was still an executory contract.

3. Legal Principles Covered to Support Case Proceedings and Judgements

Relevant Provisions: Sale of Goods Act, 1930

1. Section 4 – Definition of Sale and Agreement to Sell:
   • When ownership (property in goods) is transferred from the seller to the buyer immediately, it is a sale.
   • When the transfer is to take place at a future time or subject to a condition, it is an agreement to sell.
   • If the goods are destroyed before ownership passes, risk remains with the seller.
2. Section 18 – Goods Must Be Ascertained:
   • Property in unascertained goods does not pass until the goods are ascertained.
3. Section 19 – Property Passes When Parties Intend It To Pass:
   • The ownership of goods passes when the parties intend it to pass, which can be inferred from the terms of the contract, conduct of parties, and circumstances of the case.
4. Section 20 – Specific Goods in a Deliverable State:
   • Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property passes to the buyer when the contract is made, even if payment or delivery is postponed.
5. Section 26 – Risk Prima Facie Passes with Property:
   • Unless otherwise agreed, the goods remain at the seller’s risk until the property passes to the buyer. Once the property passes, the risk also passes, whether delivery has been made or not.

Legal Analysis:

• In this case, the goods are specific — that is, particular items of furniture were identified and agreed upon.
• The price was fixed, and the agreement was unconditional — the only postponement was of delivery and payment, not the transfer of ownership.
• Under Section 20, where goods are specific and in a deliverable state, the property passes immediately when the contract is made, even if the buyer has not yet taken delivery.
• Therefore, the ownership of the furniture passed to ‘B’ when the price was settled and the agreement was made.
• Under Section 26, once the ownership passed, the risk of accidental loss (like fire) also passed to ‘B’.
• Hence, the loss falls on ‘B’, even though he had not yet taken possession of the furniture.

Supporting Case Laws:

1. Rugg v. Minett (1809) 11 East 210:
   • The court held that when the contract is for specific goods in a deliverable state, property and risk pass to the buyer at the time of the contract, even if delivery is delayed.
2. Kursell v. Timber Operators & Contractors Ltd. (1927) 1 KB 298:
   • The case clarified that property passes only when the goods are specific and in a deliverable state.
3. Ward v. Bignall (1967) 1 QB 534:
   • Reinforced the principle that ownership and risk pass together, unless the parties agree otherwise.

Explanation:

• The key legal test is whether ownership passed at the time of the agreement.
• Here, the contract was for specific goods (particular furniture items chosen by ‘B’) and nothing further remained to be done by the seller to put them in a deliverable state.
• The fact that delivery was postponed till the next day does not prevent ownership from passing, because under Section 20, the property in goods passes when the contract is made.
• Therefore, once the ownership passed, the risk of destruction due to fire automatically shifted to ‘B’.
• Consequently, ‘B’ must bear the loss and pay the price, even though he did not yet take delivery.

4. Possible Judgement

• The furniture was specific and in a deliverable state, and the price was fixed unconditionally.
• Under Section 20 of the Sale of Goods Act, 1930, the property passed to ‘B’ at the time the contract was made.
• Therefore, the risk of loss passed along with ownership, as per Section 26.
• The destruction of the furniture by fire, though accidental and without any party’s fault, occurred after ownership had passed to ‘B’.
• Hence, ‘B’ is liable to pay the price to the seller.
• The seller is not bound to bear the loss.

Judgement:

• Held: ‘B’ is liable to pay the price of the furniture.
• Reason: Ownership and risk passed to ‘B’ when the contract was made for specific goods in a deliverable state.
• Legal Basis: Sections 20 and 26 of the Sale of Goods Act, 1930.
• Supporting Case: Rugg v. Minett (1809) 11 East 210.

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