Passing of Risk

In all legal system the passing of risk in sold goods is a big problem and an important event in the sale of goods. Once the buyer acquires risk, he become liable for the price even if the goods are lost or damaged. The financial risk of and responsibility for damage or destruction when property is being transferred between a buyer and a seller. The risk includes Peril, danger, the chance of loss or injury. Liability for injury, loss, or damage, by statute placed upon the manufacturer rather than the consumer, should it happen from normal use of a product. The Uniform Commercial Code uses a contractual approach in allocating the risk of loss and assumes that the risk is upon the seller until some event occurs that shifts the risk to the buyer. Where the goods are identified and the contract authorizes the seller to ship the goods by carrier, the event necessary to shift the risk of loss is dependent upon whether the contract is a "shipment" or "destination" contract. Where the contract does not require the transfer of the goods by carrier, risk of loss passes to the buyer upon the taking of physical possession if the seller is a merchant, otherwise risk passes on tender of delivery, unless an agreement to the contrary is made.
The phrase is also an insurance term denoting the hazards and perils that an insured is protected against, i.e., the contingencies or unknown events that are contemplated by the insured and that are covered by the insurance policy.
Under English law that is the sale of goods, act 1979 the general rule is that risk passes along with property though there are exceptions to this. The U.N. Sale of Goods Convention, 1980, is silent on the role of the parties ' intention in the passing of risk; nevertheless, the same rule emerges from the whole tenor of the Convention. The civil law applies the rule that the risk falls on the owner of the goods. The U.C.C. provides that risk of loss passes to the buyer when the goods are delivered to the