Liability for Loss in Sale or Return Transaction

In a sale or return transaction, the seller delivers goods to the buyer, who has the option to return the goods if they are unsold or unsatisfactory. The buyer becomes the owner of the goods upon delivery, but the seller retains the risk of loss until the buyer accepts the goods or the time for return has expired.

Liability of B to A for Loss

In the given scenario, A delivered the goods to B on sale or return basis. B further delivered the goods to C and then to D on similar terms. If the goods are stolen while in the custody of D, the question arises as to who shall bear the loss.

B, being the buyer of the goods from A, becomes the owner of the goods upon delivery. As such, B assumes the risk of loss while the goods are in its possession. However, as the goods were further delivered to C and D on sale or return basis, B had the same right to return the goods to A if they were unsold or unsatisfactory.

As such, B is not liable to A for the loss of the goods, as B had the right to return the goods to A before the loss occurred. A assumes the risk of loss only if the goods are accepted by B or the time for return has expired.

Who Shall Suffer Loss?

In this scenario, the loss shall be borne by D, who was the custodian of the goods at the time of theft. D had no right to return the goods to C or B, as D was not the buyer of the goods from B or A. As such, D assumes the risk of loss while the goods are in its possession.

Conclusion

In a sale or return transaction, the buyer assumes the risk of loss while the goods are in its possession, but the seller retains the risk of loss until the goods are accepted or the time for return has expired. If the goods are further delivered on similar terms, the subsequent buyers assume the same risk of loss as the original buyer. The party who had the right to return the goods before the loss occurred shall not be liable for the loss, while the party who was the custodian of the goods at the time of loss shall bear the loss.

Yes,B should be liable and he have to pay the amount of loss to A