Question

Question 1 (Word Limit = 300 words)

David wants to buy a new business suit from a boutique designer in the city. A salesman helps him find the perfect suit but the jacket is a little loose around his waist. The salesman takes some measurements and explains that the suit can be altered and ready for collection by the end of the week. David pays for the suit and gives the salesman his contact details.

Before the suit is altered, a fire breaks out in the storeroom and the suit is destroyed. The boutique designer claims that David owned the suit at the time of the fire and therefore must bear the loss.

Use the IRAC method to advise David whether or not he will bear the loss of the destroyed suit based on the Sale of Goods Act

Answer 1

Issue: Will the buyer bear the loss where the suit is destroyed by fire in the storeroom where the payment of suit is made but alteration is pending?

Rule:

Unless otherwise explicitly agreed, title passes to the buyer at the time and place at which the seller completes physical delivery of the goods, despite any reservation of a security interest and even if a document of title is to be delivered at a different time or place (UCC § 2-401(1))

The risk of loss passes to the buyer on receipt of the goods if the seller is a merchant, otherwise the risk passes to the buyer on tender of delivery (UCC § 2-509).

Action:

As per the given case, David has made the payment for the suit but the suit is not delivered to him. The suit is still with the seller kept in the storeroom for alteration. The risk of loss has not passed on to the buyer, David.

Conclusion:

Therefore based on the legal provisios of Sale of Goods Act, David will not bear the loss and it will be borne by the seller of the suit since the risk of loss had not passed from seller to David.