1. Mr Anwar agrees in writing to buy a specific second-hand lorry from Mr Babul for Tk 4m, with the lorry to be delivered and the price paid in one month. The lorry is lying in Babul's yard, ready to be driven away. Before the month ends, the lorry is stolen without any fault on the part of either party. The contract says nothing about risk or when property passes. Who bears the loss?

A) Anwar, because property in specific goods in a deliverable state passes when the contract is made, and risk follows property
B) Babul, because risk remains with the seller until the goods have been physically delivered to the buyer, whenever property in them passes
C) Neither of them, because the contract is automatically void on the theft of the lorry and the price must be repaid to the buyer
D) Both equally, because where goods are lost without fault, the parties share the loss in proportion to their payments made so far

Correct: A complex Transfer of property

Option A is correct. Under s 20, 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. Under s 26, risk prima facie follows property, so Anwar bears the loss. Option B is wrong: s 20 passes property at the date of the contract. Option C is wrong: s 8 applies only to a loss before the sale is made. Option D is wrong: there is no sharing rule.

2. A farmer agrees to sell to a mill, in a written contract, 100 quintals of paddy 'from the crop now growing on my field at Rangpur'. The crop is destroyed by a flood before it is harvested, without any fault by the farmer. The mill claims damages for non-delivery. What is the position under the Act?

A) The farmer is liable for damages, because the seller always warrants the existence of the goods at the time when he is to deliver them
B) The agreement to sell is avoided, since specific goods perished without the fault of either party before the risk passed to the buyer
C) The farmer must supply paddy from another field, because a contract for the sale of goods is not affected by the loss of the specific lot
D) The mill may require a refund of the price and, in addition, interest and damages, because the loss resulted from a natural calamity

Correct: B complex Transfer of property

Option B is correct. Under s 8, where there is an agreement to sell specific goods and subsequently the goods, without any fault on the part of the seller or buyer, perish before the risk passes to the buyer, the agreement is thereby avoided. Option A is wrong: s 8 avoids the agreement. Option C is wrong: specific goods perished, so no duty to substitute arises. Option D is wrong: avoidance gives no right to damages.

3. Ms Chaity, a retailer, orders by telephone 200 'Samsung 55-inch televisions' from Digital World Ltd, a dealer. Digital World delivers 200 televisions of a different brand, 'Haitech 55-inch', which are slightly cheaper but otherwise equal in quality. Chaity refuses delivery. Digital World says that the goods are of equal quality, so she must accept. Under s 15, what is the position?

A) Chaity must accept the televisions, because equal quality satisfies the contract and the brand is only a warranty, which gives a right to damages
B) Chaity may reject them only if she proves that the Haitech televisions are of a lower market value than the televisions she ordered
C) Chaity may reject the televisions, because in a sale by description the goods must correspond with the description
D) Chaity must accept, because she did not inspect the televisions before ordering and so waived any complaint of a difference in the description

Correct: C difficult Implied terms as to quality and sample

Option C is correct. Under s 15, where there is a contract for the sale of goods by description, there is an implied condition that the goods correspond with the description. The goods delivered differ in brand, which is a breach of condition, so Chaity may reject them. Option A is wrong: correspondence with description is a condition. Option B is wrong: no proof of lower value is needed. Option D is wrong: she ordered by description without inspection, so there was no waiver.

4. Mr Dalim, a baker, goes to a pharmacy and asks for 'something to clean my oven that is safe on food-contact surfaces'. The pharmacist, a dealer in cleaning products, recommends and sells him a chemical which leaves a poisonous residue, which contaminates bread and makes customers ill. Dalim sues for the loss. What is the position under s 16?

A) The seller is not liable, because under the rule of caveat emptor the buyer must satisfy himself about the fitness of goods he buys
B) The seller is not liable, because Dalim should have read the instructions printed on the container of the chemical before he used it
C) The seller is liable only in damages for a breach of warranty, so that Dalim cannot reject the goods or recover the price he paid
D) Liable for breach of the implied condition of fitness, as the purpose was made known and skill relied on

Correct: D complex Implied terms as to quality and sample

Option D is correct. Under s 16(1), where the buyer expressly or by implication makes known to the seller the particular purpose for which the goods are required, so as to show he relies on the seller's skill or judgment, there is an implied condition that the goods shall be reasonably fit for that purpose. Option A is wrong: s 16(1) displaces caveat emptor where purpose and reliance exist. Option B is wrong: the buyer is entitled to rely on the seller's skill. Option C is wrong: fitness is a condition, not a warranty.

5. Mr Emdad buys a branded refrigerator from a retailer, in a shop, after examining it, and selects it by its brand name from a shop display. He does not tell the retailer what he wants it for. The refrigerator turns out to be unable to cool, owing to a latent defect. The retailer deals regularly in such goods. Which implied condition may Emdad rely on?

A) The implied condition of merchantable quality, because the retailer deals in goods of that description
B) The implied condition of fitness for a particular purpose under s 16(1), because the fridge is bought for the ordinary purpose of cooling food
C) The implied condition of correspondence with sample under s 17, because the displayed fridge is a sample of the bulk from which he chose
D) No implied condition at all, because Emdad examined the refrigerator and the principle of caveat emptor applies to a buyer who inspects the goods

Correct: A complex Implied terms as to quality and sample

Option A is correct. Under s 16(2), where goods are bought by description from a seller who deals in goods of that description, there is an implied condition that the goods are of merchantable quality, provided that if the buyer has examined the goods there is no such condition as regards defects which examination ought to have revealed. A latent defect is not revealed on examination. Option B is wrong: fitness requires the particular purpose to be made known. Option C is wrong: this was a sale of a specific unit, so s 17 is not in point. Option D is wrong: examination does not reveal a latent defect, so s 16(2) protects him.

6. Zahed sells a camera to Yusuf, who pays the price and takes delivery. Later, a third party, Rina, proves that the camera was stolen from her and that Zahed had no title. Rina recovers the camera from Yusuf. Yusuf sues Zahed. Under s 14, what is Yusuf's remedy?

A) He may claim damages for breach of warranty only, but may not recover the price paid, because he used the camera for some time
B) He may reject and recover the price paid, because there is an implied condition that the seller had a right to sell
C) He has no remedy, because Yusuf took delivery and accepted the goods, which converts the condition into a warranty under s 13
D) He may claim only the cost of the camera less depreciation during the time of use, since the buyer must give credit for the use

Correct: B difficult Conditions and warranties

Option B is correct. Under s 14(a), in a contract of sale there is an implied condition on the part of the seller that he has a right to sell the goods. Failure of title is a breach of that condition, and the consideration wholly fails, so the buyer may recover the price. Option A is wrong: s 14(a) is a condition. Option C is wrong: acceptance does not convert a total failure of title into a warranty claim. Option D is wrong: the consideration failed totally, so no deduction for use is allowed.

7. A contract for the sale of 1,000 tonnes of sugar requires delivery in four equal monthly instalments. The seller delivers the first instalment on time, but the second is 20% short in quantity. The buyer rejects the second instalment and also refuses the third and fourth, treating the contract as at an end. The contract is silent on the matter. What is the position under s 38?

A) The buyer may reject all instalments, because any breach in one instalment automatically terminates the whole contract of sale
B) The buyer may reject only the second instalment, because a breach in one instalment can never affect the later instalments
C) Depends on the contract and the circumstances, including the proportion and likelihood of repetition
D) The buyer must accept all instalments, because the shortage was only a small proportion of the whole contract quantity

Correct: C complex Delivery and payment

Option C is correct. Under s 38(2), where there are separate payments for each instalment and some are defective, it depends on the terms of the contract and the circumstances whether the breach is a repudiatory breach of the whole contract or a severable breach for compensation only. Option A is wrong: s 38(2) does not provide an automatic rule. Option B is wrong: the effect on later instalments depends on the circumstances. Option D is wrong: the shortage is relevant, but not decisive.

8. Mr Farid sells a motorcycle to Mr Gaffar for Tk 200,000 but remains in possession, as Gaffar has not yet arranged for collection. Farid, who is dishonest, then sells the same motorcycle to Mr Habib for Tk 190,000. Habib pays, takes delivery, in good faith and without notice of the earlier sale. Gaffar claims the motorcycle from Habib. Under s 30, what is the position?

A) Gaffar recovers the motorcycle, because a seller who has already sold goods has no title left that he can pass on to a later buyer
B) Gaffar recovers the motorcycle, because property had passed to him and a later innocent buyer can never override the title of the first buyer
C) Habib gets title only if Gaffar had consented in writing to the sale by Farid, because the law requires the first buyer's written consent
D) Habib obtains a good title, because a seller in possession after the sale may pass a good title to a buyer in good faith

Correct: D complex Transfer of title

Option D is correct. Under s 30(1), where a seller continues in possession of the goods after the sale, a delivery or transfer by him to any person receiving the goods in good faith and without notice of the previous sale has the same effect as if expressly authorised by the owner. Gaffar's remedy lies against Farid. Option A is wrong: s 30(1) is an exception to the nemo dat rule. Option B is wrong: the exception protects the later buyer in good faith. Option C is wrong: no written consent is required.

9. Ms Iram obtains a gold necklace on credit from a jeweller by falsely representing that she is a solvent customer, so that the jeweller's consent is induced by fraud. Before the jeweller rescinds the contract, Iram sells the necklace for cash to a goldsmith, Jalal, who buys in good faith and without notice of the fraud. The jeweller seeks to recover the necklace from Jalal. What is the result under s 29?

A) Jalal acquires a good title, since the contract was not rescinded at the time of sale and he took in good faith
B) The jeweller may recover the necklace, because a person cannot give a better title than he himself has, and Iram had no title
C) The jeweller may recover the necklace, because a title obtained by fraud is void from the beginning and cannot be passed to anyone
D) Jalal acquires a good title only if he paid a price equal to the market value of the necklace at the time of the sale

Correct: A difficult Transfer of title

Option A is correct. Under s 29, where a seller has a voidable title to the goods, but his title has not been avoided at the time of the sale, the buyer acquires a good title provided he buys in good faith and without notice of the seller's defect of title. Option B is wrong: s 29 protects the buyer from a person with voidable title. Option C is wrong: a title obtained by fraud is voidable, not void. Option D is wrong: no market-value requirement exists.

10. Mr Karim sends a laptop to Ms Lily on 'sale or return' basis for seven days. On the fifth day, Lily, without telling Karim, pledges the laptop with a moneylender for a loan. On the seventh day, the laptop is destroyed by a fire at the moneylender's premises, through no fault of anyone. Karim claims the price. Under s 24, what is the position?

A) Karim bears the loss, because property remains with the seller until the end of the seven days and the risk follows the property to him
B) Property passed to Lily when she pledged the laptop, as that act is an adoption of the transaction, so she must pay the price
C) The loss is shared, because property passes only after the buyer pays the price and the goods were destroyed before payment
D) Lily is liable for damages only for her negligence in lending the laptop, and the price is not payable since the goods perished

Correct: B complex Transfer of property

Option B is correct. Under s 24(a), when goods are delivered on approval or sale or return, property passes to the buyer when he signifies his approval or acceptance to the seller or does any other act adopting the transaction. Pledging the goods is an act adopting the transaction inconsistent with Karim's ownership. Option A is wrong: property had passed by adoption. Option C is wrong: payment is not needed for property to pass. Option D is wrong: once property passed, the price is payable.

11. A seller, Supermart, sells 50 sacks of rice out of a godown containing 500 identical sacks, with no sack identified or separated. Before any appropriation, a fire destroys the godown. The buyer, who has paid in advance, claims the price back. Supermart says that the property and risk had passed. Under s 18 and s 23, what is the position?

A) Property passed when the price was paid, because payment in advance is conclusive evidence of an intention to pass property
B) Property passed when the contract was made, because rice is a commodity that is deemed to be ascertained once the price is agreed
C) Property had not passed because the goods were unascertained, so the loss falls on the seller, who must refund
D) Property passed pro rata, so that the buyer bears one-tenth of the loss of the godown and the seller bears the remaining part

Correct: C complex Transfer of property

Option C is correct. Under s 18, where there is a contract for the sale of unascertained goods, no property is transferred unless and until the goods are ascertained. Under s 23, property passes on unconditional appropriation. Nothing had been appropriated, so risk stayed with the seller. Option A is wrong: payment alone does not ascertain goods. Option B is wrong: price agreement does not ascertain goods. Option D is wrong: there is no pro rata rule.

12. A buyer, Mr Mamun, agrees to buy goods on credit and the property in them passes to him on delivery. Before the credit period ends, Mamun is declared insolvent. The goods have been shipped by sea and are in the hands of a carrier. The seller, Nur Traders, wants to get the goods back, as it has not been paid. What is the seller's right under s 50?

A) The seller has no right because property has passed, and an unpaid seller has no right against goods in which property has passed to the buyer
B) The seller may sue for the price only, and has no right to take back goods that have left his possession for any reason
C) The seller must first obtain a court order before notifying the carrier, because a stoppage in transit can be effected only through the court
D) The seller may stop the goods in transit by giving notice to the carrier, because the buyer is insolvent and the seller is unpaid

Correct: D difficult Rights of unpaid seller

Option D is correct. Under s 50, when the buyer of goods becomes insolvent, the unpaid seller who has parted with possession of the goods has the right of stopping them in transit, that is, of resuming possession while they are in transit and retaining them until payment. Option A is wrong: the seller can stop in transit although property passed. Option B is wrong: stoppage is a real right against the goods. Option C is wrong: notice to the carrier suffices.

13. Mr Omar sells goods to a customer on terms that the price will be paid within 30 days of delivery. Delivery is made, and after 30 days Omar finds the customer has not paid. The goods are now at the customer's warehouse. Omar wants to retain the goods under s 47 as an unpaid seller. Can he do so?

A) No, because an unpaid seller's lien exists only while the seller is in possession of the goods
B) Yes, because an unpaid seller has a lien over goods wherever they are located, and delivery does not affect the seller's right
C) Yes, because the credit period has expired and the seller may enter the warehouse to take back the goods without any court order
D) Yes, but only as to half of the goods, because a lien extends to a portion only when part of the price has been paid

Correct: A complex Rights of unpaid seller

Option A is correct. Under s 47, the unpaid seller in possession of the goods has a right to retain them until payment. Once the goods are delivered to the buyer without reserving the right of disposal, the lien is lost (s 49). Omar's remedy is a suit for the price under s 55. Option B is wrong: lien needs possession. Option C is wrong: there is no right of entry. Option D is wrong: no half-lien rule applies.

14. At an auction of a rare painting, the auctioneer announces that the sale is 'without reserve' and that no bidding by the seller is permitted. The bidding reaches Tk 700,000. Before the hammer falls, the seller's friend, at the seller's request, makes a pretended bid of Tk 800,000 to raise the price. The painting is knocked down to Mr Pervez at Tk 800,000 after he bids Tk 810,000. Is the sale binding on Pervez under s 64?

A) Yes, because a sale by auction is complete on the fall of the hammer, and the buyer has no right to complain of a competitive bidding practice
B) No, because the sale is voidable at the buyer's option if pretended bidding is used to raise the price
C) Yes, but only for the amount of the last genuine bid, because a pretended bid is disregarded and the previous genuine bid prevails
D) No, because every sale by auction is voidable at the option of the buyer within a reasonable time after the hammer has fallen

Correct: B complex Auction sales

Option B is correct. Under s 64(6), the sale is voidable at the option of the buyer if the seller makes use of pretended bidding to raise the price. Under s 64(4), a seller may not bid unless the right was notified. Option A is wrong: the sale is voidable for pretended bidding. Option C is wrong: the sale is not reduced; it is voidable at the buyer's option. Option D is wrong: not every auction sale is voidable.

15. Mr Abdul agrees in writing to transfer to Mr Babar a particular lorry in return for Tk 3m, with the price to be paid in three months. A dispute arises over whether this arrangement is a contract of sale under the Sale of Goods Act 1930, since Babar suggests that a sale needs a transfer of land together with the goods, and that delivery must take place on the same day as the agreement. A lawyer sets out five suggested essentials of a contract of sale under s 4, and the parties ask which are essentials. (Select THREE.)

Multiple response
A) The delivery of goods on the same day as the agreement
B) Two parties, a buyer and a seller
C) A transfer of ownership of immovable property along with the goods
D) A price in money paid or promised
E) Goods, the property in which is to be transferred

Correct: B, D, E difficult Formation and nature of a contract of sale

Option A is wrong: delivery need not be at once. Option B is correct: s 4. Option C is wrong: goods do not include immovable property. Option D is correct: s 4. Option E is correct: s 4 and s 2(7).

16. Crown Textiles buys a spinning machine under a contract that says it must be 'new, of German make and delivered by 15 March', and that the seller will provide a one-year service. The machine arrives from another country, a month late, with a minor cosmetic fault. The buyer wants to reject the machine, while the seller says that the stipulations are only warranties, and in any case the buyer has already used it. A lawyer sets out five propositions on conditions and warranties under ss 12 and 13, and the parties ask which are correct. (Select THREE.)

Multiple response
A) A condition is a stipulation essential to the main purpose of the contract, the breach of which gives a right to treat the contract as repudiated
B) A warranty is a stipulation collateral to the main purpose, the breach of which gives a right to damages but not to reject the goods
C) In every case a breach of warranty gives the buyer a right to reject the goods and recover the price
D) Whether a stipulation is a condition or a warranty depends only on the word used by the parties
E) A breach of condition may be treated as a breach of warranty where the buyer elects, or accepts the goods

Correct: A, B, E complex Conditions and warranties

Option A is correct: s 12(2). Option B is correct: s 12(3). Option C is wrong: a warranty gives damages only. Option D is wrong: depends on the construction of the contract. Option E is correct: s 13.

17. Mr Shamim sells goods in Chattogram to Mr Tanvir for delivery in Dhaka. The goods are handed to a carrier for transport, and the parties dispute whether the price must be paid before delivery, who must apply for delivery, who bears the risk of deterioration that is natural in transit, and whether the buyer must send back goods that he rejected rightly. A lawyer sets out five statements on delivery under the Sale of Goods Act 1930. (Select FOUR.)

Multiple response
A) Where goods are sold at one place and delivered at another, the buyer bears any deterioration necessarily incident to transit
B) A buyer is bound to return rejected goods to the seller at his own expense
C) Delivery of goods and payment of the price are concurrent conditions, unless otherwise agreed
D) Delivery to a carrier for transmission is prima facie delivery to the buyer
E) The buyer must apply for delivery unless otherwise agreed

Correct: A, C, D, E complex Delivery and payment

Option A is correct: s 40. Option B is wrong: s 43 says the buyer need not return them. Option C is correct: s 32. Option D is correct: s 39. Option E is correct: s 35.

18. Nur Traders sells goods on credit to a buyer, who becomes insolvent before paying. Some goods are still in Nur's warehouse and some are with a carrier, while the buyer's creditors claim all the goods. Nur says it is an unpaid seller and wants to know which rights it has against the goods themselves, whether it can sue for the price in every case, and whether it may force the buyer to take back goods already delivered. A lawyer sets out five statements under s 46 of the Sale of Goods Act 1930. (Select THREE.)

Multiple response
A) A lien on the goods while they are in his possession
B) A right of resale in the circumstances stated in the Act
C) A right of stopping the goods in transit after he has parted with possession, if the buyer becomes insolvent
D) A right to sue for the price in every case, even where property has not passed and the price is not payable on a fixed day
E) A right to compel the buyer to take the goods back after the contract is rescinded by the court

Correct: A, B, C difficult Rights of unpaid seller

Option A is correct: s 46(1)(a). Option B is correct: s 46(1)(c). Option C is correct: s 46(1)(b). Option D is wrong: s 55 limits the suit for price. Option E is wrong: this is not a seller's right.

19. Mr Sohel agrees to sell 100 tonnes of sugar from a large godown, to be weighed by him before delivery, and a machine that needs to be assembled by him before it can be used. The buyer pays part of the price and expects the property to pass at once on payment. Disputes arise over who bears the risk. A lawyer sets out five propositions about the passing of property under ss 18 to 24 of the Sale of Goods Act 1930. (Select THREE.)

Multiple response
A) Property passes in goods sold only when the goods are physically delivered to the buyer
B) Where specific goods are not in a deliverable state, property passes when the seller does what is necessary to put them in that state and the buyer has notice
C) Property in unascertained goods passes when goods of that description in a deliverable state are unconditionally appropriated to the contract with the assent of the other party
D) Where the seller must weigh, measure or test the goods to ascertain the price, property passes when the act is done and the buyer has notice
E) Property in goods always passes on payment of the price

Correct: B, C, D complex Transfer of property

Option A is wrong: delivery is not necessary. Option B is correct: s 21. Option C is correct: s 23. Option D is correct: s 22. Option E is wrong: property passes by intention, not by payment.

20. Mr Quddus sold a laptop to Ms Ruma for Tk 90,000. After property had passed to her, she wrongly refused to pay; on another occasion, she wrongly refused to accept delivery of accessories; and Quddus failed to deliver a different laptop that she had also ordered, then offered a replacement of lesser quality. Ruma wishes to reject the goods and sue, and Quddus wishes to sue for the price. A lawyer sets out five statements about the remedies of buyer and seller under ss 55 to 61 of the Sale of Goods Act 1930. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. The seller may sue for the price where property in the goods has passed to the buyer and the buyer wrongfully neglects or refuses to pay.   Yes

2. The seller may sue for damages for non-acceptance where the buyer wrongfully neglects or refuses to accept and pay.   Yes

3. The buyer may sue for damages for non-delivery where the seller wrongfully neglects or refuses to deliver.   Yes

4. The court may order specific performance of a contract for the sale of specific goods.   Yes

5. The buyer may claim damages on a breach of condition, but never reject the goods.   No

Correct: Y, Y, Y, Y, N complex Remedies for breach

(1) Yes: Yes. Section 55(1). (2) Yes: Yes. Section 56. (3) Yes: Yes. Section 57. (4) Yes: Yes. Section 58. (5) No: No. A breach of condition may entitle the buyer to repudiate.

21. Mr Ahmed holds jewellery as a mercantile agent for Ms Bina and sells it to a buyer in good faith in the ordinary course of business, a thief sells a stolen watch to another buyer who pays full value, and a co-owner in sole possession of a car, with the consent of the other co-owners, sells it to a third buyer. The true owners want the goods back. A lawyer sets out five statements about the transfer of title by a non-owner under ss 27 to 30 of the Sale of Goods Act 1930. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Where goods are sold by a person who is not the owner and who does not sell under the authority or consent of the owner, the buyer acquires no better title than the seller had.   Yes

2. A buyer may acquire a good title if the owner is by his conduct precluded from denying the seller's authority to sell.   Yes

3. A co-owner in sole possession of the goods with the consent of the other co-owners may pass a good title to a buyer in good faith.   Yes

4. A mercantile agent in possession with consent of the owner may pass good title if he acts in the ordinary course of business and the buyer acts in good faith.   Yes

5. A thief can pass a good title to a buyer who buys in good faith and pays full value.   No

Correct: Y, Y, Y, Y, N difficult Transfer of title

(1) Yes: Yes. Section 27. (2) Yes: Yes. Section 27. (3) Yes: Yes. Section 28. (4) Yes: Yes. Proviso to section 27. (5) No: No. Nemo dat applies.

22. Mr Karim receives 200 sacks of rice from a mill and uses a week to examine them, during which he sells 50 sacks to his own customers without telling the mill. He then finds that the rest is defective, and wants to refuse delivery and send it back to the mill at the mill's cost. The mill says that he has accepted the rice and has no right to examine it again. A lawyer sets out five statements about examination, acceptance and rejection under ss 41 to 44 of the Sale of Goods Act 1930. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. The buyer is entitled to a reasonable opportunity to examine the goods to see whether they conform to the contract.   Yes

2. The buyer is deemed to have accepted the goods when he intimates acceptance, or does an act inconsistent with the seller's ownership.   Yes

3. The buyer is deemed to have accepted the goods if, after a lapse of reasonable time, he retains them without intimating rejection.   Yes

4. A buyer who refuses to accept delivery must return rejected goods to the seller.   No

5. A buyer who rightly rejects goods is not bound to return them; it is enough that he intimates refusal.   Yes

Correct: Y, Y, Y, N, Y complex Delivery and payment

(1) Yes: Yes. Section 41. (2) Yes: Yes. Section 42. (3) Yes: Yes. Section 42. (4) No: No. Section 43 says he need not return them. (5) Yes: Yes. Section 43.

23. At an auction of antique furniture in Dhaka, a number of lots are offered. A bidder, Mr Farid, makes a bid and then wishes to withdraw it before the hammer falls. The seller's agent bids on the seller's behalf without any notice reserving the right to bid, the auctioneer sets a reserve price, and another dispute arises about the moment when a sale is complete. A lawyer sets out five statements about sale by auction under s 64 of the Sale of Goods Act 1930. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner.   Yes

2. Until that moment, any bidder may retract his bid.   Yes

3. A right to bid may be expressly reserved by or on behalf of the seller.   Yes

4. Where the sale is not notified to be subject to a right to bid on behalf of the seller, the seller may bid freely.   No

5. A sale may be notified to be subject to a reserve or upset price.   Yes

Correct: Y, Y, Y, N, Y complex Auction sales

(1) Yes: Yes. Section 64(2). (2) Yes: Yes. Section 64(2). (3) Yes: Yes. Section 64(3). (4) No: No. Section 64(4) bars bidding by the seller unless the right is notified. (5) Yes: Yes. Section 64(5).

24. Mr Anwar agrees on 1 June to sell his generator to Mr Billal for Tk 400,000, with property to pass only on full payment due on 30 June. On 20 June the generator is destroyed by lightning while in Anwar's workshop, through no fault of either party. Who bears the loss?

A) Anwar, because the property had not yet passed to Billal
B) Billal, because the price was agreed and the generator was identified, and the risk in goods passes with the date of the agreement
C) Both equally, because a loss from a natural event that neither party caused is shared by the parties in the same proportion
D) Billal, because he has the right to take delivery of the generator at any time and a buyer with that right carries the risk

Correct: A complex Passing of property and risk

Option A is correct. This is an agreement to sell, since the property is to pass at a future time on a condition. Risk prima facie passes with the property, so the loss falls on Anwar as owner at the time of destruction. Option B is wrong: risk follows property. Option C is wrong: risk does not pass with the agreement date. Option D is wrong: the right to take delivery is not the test.

25. Mr Emon contracts to buy 100 bags of Grade A cement for one building project. Seller delivers all 100 bags, but they are Grade B. Emon, before opening the bags, uses 40 of them and then discovers the defect. He wants to reject the remaining 60 bags and refuse the price. May he?

A) Yes, because description is a condition and the breach of any condition entitles the buyer to repudiate the whole contract in every case
B) No, because he accepted part, so he may only claim damages for the breach of condition
C) Yes, because he did not examine the goods before use, and a buyer who has not examined the goods retains the right to reject at any time
D) No, because Grade B is a warranty and a warranty can never be treated by the buyer as a breach that gives a right to claim damages

Correct: B complex Conditions and warranties

Option B is correct. Where a contract of sale is not severable and the buyer has accepted the goods or any part of them, the breach of a condition is to be treated as a breach of warranty. Emon's use of 40 bags was an act inconsistent with the seller's ownership, so he may only claim damages. Option A is wrong: section 13 treats the breach as a warranty after acceptance. Option C is wrong: an act inconsistent with the seller's ownership is acceptance. Option D is wrong: damages are available for breach of warranty.