Q.A agrees to sell his motorbike to B, delivery and payment to take place after one week. Before delivery, the motorbike is destroyed by an accidental fire in A's garage, without any fault of A or B. Discuss the rights and liabilities of A and B.

Since delivery and payment were both postponed here, this is only an Agreement to Sell — and the Act has a specific rule for exactly this situation.

Because delivery and payment were both to happen later, this is an Agreement to Sell, not a completed Sale — property (and risk) had not yet passed to B. When the specific goods (the motorbike) perish through the fault of neither party before risk passes, Section 8 avoids the agreement altogether.

Step 1 — classify the contract: since both delivery and payment were postponed to a future time (one week later), this is an AGREEMENT TO SELL, not a completed Sale (Section 4(3)) — property in the motorbike had not yet passed to B.

Step 2 — apply the destruction-of-goods rule: Section 8 provides that where there is an agreement to sell SPECIFIC goods, and those goods perish (or are damaged so as no longer to answer their description) WITHOUT THE FAULT of either the seller or the buyer, BEFORE THE RISK has passed to the buyer, the agreement is thereby AVOIDED.

Step 3 — apply the risk rule: under Section 26, risk prima facie passes WITH property — since property had not yet passed to B, the risk of the fire still lay with A, the seller.

Conclusion: the agreement between A and B is void under Section 8. B is not liable to pay the price, since the motorbike is now destroyed through no fault of either party, and A cannot demand the price either, since the loss falls on A as the party who still bore the risk at the time of destruction.

A frequent error is assuming the buyer B must still pay simply because a contract existed. Students must first correctly identify that this is an AGREEMENT TO SELL (not a completed sale) before Section 8 can even apply — if the motorbike had already been delivered and paid for (a completed sale), the outcome would be entirely different, since risk would already have passed to B.