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To begin with, contracts are lawfully enforceable agreements. So to speak, the normal rules of any agreement will apply in the sale of goods and all the related transactions. In this context, Sale of Goods Act is a parliamentary Act in the Unite kingdom which basically controls contracts in sales and a purchase of goods. The Act was formulated in 1893 and later some amendments were done on it from 1979 onwards.
The main objective of the Act is to provide a laid down officially permitted rules which are obligatory in the most commonly agreed sales contracts as it regards the commercial prospect thereof. In particular, the Act becomes more pertinent in contracts where the property or the title in the goods is passed or there is an accord for them to be transferred for a deliberation of money. Following this point, the Sale of Goods Act has rules that must apply if the property and the risk are to be passed. As such, passing risk and property in the context of the Act are two very important factors of which there are provisions that have been made for them.
In line with this, passing of risk and property has to do with when and circumstances under which the risk and property should be conceded. The passing of property which means the passing of ownership or title to the buyer from the seller cannot pass except for the goods are determined. The identification in this case means the recognition of the real goods that have been sold. In the case of a contract for the sale of specific or determined goods, section 19(1) makes the provision that the ownership is transferred to the buyer at the agreed time the buyer and seller (Fuller 2010, p.54).
In the light of this point, the purpose of the parties is determined by the terms of the contract, the performance of the parties and from the larger perspective the circumstances of the case. The terms of contract in regard to the passing of property have several rules that need to be adhered to. To start with, in a case where there is an unrestricted contract for the sale of explicit goods, in a deliverable state, the passing of the property in the goods is made when the deal is made (Ziegler 1999, p.16). In relation to this, if there is an accord for the sale of particular goods with the seller being obliged to do something to the goods for the rationale of putting them in a deliverable state, the property does not pass unless this term is met and a notification thereof given. Along with this, a case where the sale of specific goods in a deliverable condition and the seller is bound to make certain that he or she measures, weighs, tests or performs some act to the goods in order to determine the price, the property only passes when that act has been carried out and the buyer is made aware of it (Campell 2007, p.106). More to this point, in a case where goods are delivered on endorsement, on sale or return or other related terms, the property then passes to the buyer on certain conditions (Campell 2007, p.254).
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As such, when the buyer informs the seller of his or her endorsement, then the property can pass to the buyer. In addition, if the buyer then does not notify the seller of his endorsement or receipt but rather remains with the goods without giving note of refusal either, and the expiration time given then expires, the property is passed (Flambouras 2010). In a case whereby the contract involves sale of goods which are not identified or future goods by explanation, property may pass on condition that: the goods of the depiction are categorically appropriated to the agreement either by the seller with the acquiesce of the buyer and the vise versa (Campell 2007, p.254).
In the same line of thought, passing of risk in the Sale of Goods Act is an important factor whose importance cannot be underrated. In this sense, risk is closely related to property and therefore, whenever one thinks of passing the property, should also think of passing the risk. Risk in this context, it is used to bring the meaning of mishaps which range from a slight damage to theft or total destruction of goods (Fuller 2010). Depending on the customary conditions, risk may be inherent in the ownership or possession and from the larger point of view both. Except for the point where the opposing purpose has been exposed, risk remains to be with the seller. However, in a case where title is passed to the buyer, then the goods are at this point at the buyer's risk given to whether or not liberation is made In a more general point of view, the Act provides that where a seller agrees to bring the goods at his own risk to a place other than the place the goods are located when sold, except it is or else agreed, the buyer must take any risk of wear and tear in the goods inevitably in the itinerary of transit (Campell 2007,p.186).
There are actually points of exception when it comes to issues to do with passing of risk under the Sale of Goods Act. As such, risk in the goods will not pass together with the property to the buyer if it happens that there is delay in delivering goods. In such a scenario, whether it is the buyer or the seller with the delay, he or she is entitled to take the liability for both the delay and the assistant risk (Flambouras 2010, p.1).
In line with this, there is another type of contract which is used in the sale of goods and as such a officially enforceable concord. So to speak, the Vienna convention contract is meant to govern the development of contract of sale along with the privileges and the responsibilities of the seller and the buyer arising from the very contract (Flambouras 2010, p.1). This kind of a contract is actually not concerned with the legality of the contract of sale of goods, its proviso of it or the consequence the convention may have. In this sense, the Vienna convention is meant to endorse standardization in the appliance and surveillance of honesty in the intercontinental trade.
Once a bid is made under the dictates of this convention, the offer cannot be either withdrawn or revoked before the date of acceptance is communicated to the one who has offered it. Actually, receipt is only applicable when its note reaches the one who offered it. Besides this point, Vienna Convention contract governs agreements of supply of goods to be manufactured or produced unless the party who orders the goods assumes to supply a considerable part of the resources for the production (Ziegler 1999, p.401).
Arguably, Viena Convention is appropriate to contracts of sale of goods that takes place among parties whose places of trade are in diverse states when the states are signatory states (Carr & Stone 2005). As such, the contract can only apply when the rules of private intercontinental law guide to the application of the law of a contracting State (Carr & Stone 2005, p. 89). Given to this point is the fact that the contract is viable when the contracting state is a signatory and its law is the one to be applied. Under the Vienna convention contract, the sale of goods with carriage and the sale of goods on shipment, tangible risk passes to the buyer when he takes over the goods or if he happens to delay in taking them from the time the goods are positioned at his or her clearance by contravening the convention by a letdown to take the liberation (Sinclair1984).
More to this point, the seller has to put the goods at the clearance of the buyer at the seller's own place of trade or his own depot. Another point to note is that the risk can be passed when the agreement involves carriage of goods but it is whereby the seller does not use his own form of transfer. As such, the seller's self-regulating act is as much as necessary and risk passes when the liberation is unpaid and the buyer is already responsive of the fact that goods have been placed at his or her clearance. Vienna contract states that loss of or damage to the goods after the risk has passed to the buyer does not set free him from his responsibility to pay the price, unless the loss or smash up is due to an act of oversight of the seller (Carr & Stone 2005, p.91). If it happens that terms stating when the risk is to be passed are not there, the Vienna Convention contract then ties passing of risk to exacting situation which necessitate whether the sale contract calls for a carriage or not. As such, risk is passed when goods are handed to the first carrier. In regard to the passing of property, Vienna convention contract does not concern itself with it (Sinclair 1984). In simpler terms, Vienna convention contract does not actually make conform the passing of possession or property from the seller to the buyer but rather the standardization of the contract.
Besides the Sale of Goods Contract and Vienna convention contract, there are the FOB and CIF contracts. FOB contract in this case, it is an abbreviation which is used to mean Free On Board contracts. In this connection, FOB sale determination takes place and thus possession and ownership of the goods pass to the buyer together with risk on loading or shipment of the goods by the seller (Campbell 2007, p.559). In particular, the risk is passed from the seller to the buyer when the seller delivers the goods on board the agreed mode of carriage which may be a ship, rail wagon or truck (Campbell 2007, p.559).
When the goods pass the ship's rail in the case of maritime sale, the risk is passed thereof. Risk is actually passed on shipment and thus FOB contracts would refer to the goods as being on board or not on board or as loaded or not yet loaded. Under this kind of convention, a sale of goods inflicts a duty on the seller to put the goods on board the ship and as such produce a bill of lading in the very terms customary in the trade (Fisher & Fisher 1998, p.134). In essence, any FOB contract has the seller by himself or with another party inserting the goods whether detailed or undetermined, on board the ship and when the goods are placed on board, they should then be appropriated to the contract and thus the risk is passed to the buyer who has an insurable interest in the goods preceding to an earlier notice for insurance (Fisher& Fisher 1998, p.134).
In the same way, the seller bears the cost of putting goods on board the ship along with the buyer correlatively choosing g the ship on board which the goods must be loaded. Needless to say, the buyer must bear the related operating costs that are made proviso by the vessel upon which the goods are being transported. Such charges involve port charges, stowage charges, and freight duties, consular fees along with arrival charges (Fisher& Fisher 1998, p.134).
At this point, it is important to bring into view the CIF contracts and how they actually operate. Basically, there are responsibilities that the seller is indebted to do. As such, the seller should make out an account of the goods sold along with shipping at the port of shipment goods following the account provided in the convention (Fisher& Fisher 1998, p.135). It is also the responsibility of the seller under CIF to make procurement on shipment and a contract of affreightment by sea under which the goods are meant to be delivered to the destination already provided in the contract (Fisher& Fisher 1998, p.135).
Again in this context, the seller should ensure the arrangement for marine insurance upon the terms provided in the trade available to the benefit of the buyer (Fisher& Fisher 1998). At the same time, the seller must with all reasonable dispatch send forward to the buyer shipping documents that incorporate the invoice, bill of lading and policy of insurance (Fisher& Fisher 1998, p.135). In this case, property is passed to the buyer at the moment when he or she pays and takes up the documents (Fisher& Fisher 1998). On the other hand, the risk is passed to the buyer at the moment when the goods are shipped and thus at the time the goods are handed over to the carrier who issued the documents that describe the agreement.
Having provided an overview of each and every contract in this context, it is important to bring into view the similarities that exist between them as well as differences thereof. So to articulate, the sales of goods act, Vienna convention, FOB and CIF have one common similarity that they are all contracts of sale of goods involving terms that bind the seller and the buyer (Campbell 2007, p.559-560). In fact, the contracts are enforceable agreements by law and in case of any violation, legal actions can be taken. In spite of the similarities that exist from a general point of view, the reasons for differences and similarities in passing risk and passing property in the sale of goods act, the viena convention, FOB and CIF contracts are tantamount.
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Following this point, passing of risk and property in these contracts have some which are similar while others differ. For instance, passing of property in the sale of goods Act, happens when the goods have been ascertained and thus there are rules that are followed in order for the property to be passed. As such, in the case of a contract for the sale of specific or ascertained goods, the property is passed to the buyer at time agreed on by the parties (Fuller 2010, p.54). In line with this, in a case where there is an unobstructed agreement for the sale of particular goods, the passing of the property in the goods is made when the contract is made (Fisher& Fisher 1998).
Accordingly, if there is a contract for the sale of specific goods with the seller being obliged to do something to the goods for the reason of putting tem in a deliverable state, the property does not pass save for this term being met by being done and then the buyer notified (Ziegler 1999, p.16). In the same way, a case where the sale of specific goods in a deliverable state and the seller is obliged to make certain that he or she measures, weighs, tests or perform some act to the goods in order to make certain the price, the property only passes when that act has been carried out and the buyer is notified in this case (Campell 2007, p.106)..
Equally important, passing of risk in this case goes hand in hand with passing of property. Actually, passing of risk resides with the ownership or possession of the goods. Thus, when the property has been passed, then, risk should accompany it altogether. Quiet contrary to the Sales of Goods Act, Vienna Convention Contract which is meant to bring standardization as a contract does not concern itself with the passing of property and therefore, it has got no provisions of passing of property (Arthur 1984). However, under the Vienna convention contract, the sale of goods involving carriage and the sale of goods on transit, definite risk passes to the buyer when he takes over the goods or if he happens to holdup in taking them from the time the goods are placed at his or her clearance by infringing the contract by a failure to take the delivery. It is important at this point to bring the point that passing of risk in Vienna is the same as that which is in the Sales of goods Act though reliant on the prevailing situations.
Additionally, FOB contracts have the passing of the property together with risk on loading or shipment of the goods by the seller. As such, this is so different from the sale of goods act and Vienna Convention contract whereby for sales of goods act the property is passed on ascertainment depending on the prevailing conditions (Ahmadu & Hughes 2006). Quiet contrary, FOB contracts pass both the property and risk at shipment which in simpler terms is said to be at the ship rail. As well, FOB differs from Vienna which does not actually provide rules for passing of property but rather actual risk passes to the buyer when he takes over the goods or if he happens to impediment in taking them once they are at the clearance point by contravening the contract by a letdown to take the liberation.
On the other hand, there is the CIF contracts of which the passing of property and risk are very different. To begin with, in CIF contracts, property is passed to the buyer at the moment when he or she pays and takes up the credentials which are given from the seller by carrier. This is irrespective of the condition of the goods unless it was with the consent of the seller. Passing of property in this case is different from sales of goods act of which passing of property depends on the prevailing situation in regard to ascertainment (Arthur 1984, p.65). Pointless to state, the Viena Convention contract has nothing to do with passing of property. At the same time, FOB has the passing of the property on loading or shipment of the goods by the seller. This is where CIF differs with FOB contracts as CIF passes property at the moment when he or she pays and takes up the documents. On the other hand, passing of risk in CIF is the same as that of FOB which is passed at the ship rail. However, this differs from passing of risk in Vienna convention which is passed at the possession of goods. Also, it differs with sales of goods act of which risk is passed along with the property. Thus, it is arguable that reasons for differences and similarities in passing risk and passing property in the sale of goods act, the Vienna convention, FOB and CIF contracts, is associated with the nature and the provisions of the individual contracts.