Question

Question 3

(a) Serena wanted to buy a car as her new job required her to drive often. She walked into Toyota’s new car lot, pointed to a specific car, and said, "I'll take that one." Clement, a Toyota’s agent who managed the car lot, explained that there was a certain amount of pre - delivery preparation that had to take place before the car could be delivered, and that it would be ready for the purchaser two days later. It was agreed that the purchase price would be paid at that time. Explain who bears the risk in the meantime.

(b) Assuming that Serena did not like the colour of the kind of car that she saw at the car lot. She nevertheless paid the purchase price upon an agreement that Toyota Company would deliver to her house the next week, that car, with the colour (red) that she liked. It happened that as the car was being transported for delivery to Serena’s house on back of a carrier truck, the carrier-truck was involved in an accident, and the windshield of the new red car broke. Explain who bears the risk of this damage.

Answer 1

a) In this case since risk, reward and ownership of cars still lies with seller as serena has just selected the model and no formal documentation regarding tranfer of title had taken place, Seller of car is at risk till conclustion of final sale deed and registation of vehicle with proper authoristies in the name of purchaser.

b) In the second senario RISK, REWARD AND OWNERSHIP of car has been transferred to serena thus risk lies with the serena. However if the car is insured from the insurer, insurance company will pay for the daages if the same is covered by terms of policy