A sale agreement makes the price depend on a named third party’s valuation. The third party does not value the goods, neither party prevented the valuation, and no goods were delivered or…
Question and options
A sale agreement makes the price depend on a named third party’s valuation. The third party does not value the goods, neither party prevented the valuation, and no goods were delivered or appropriated. What follows under Section 10 of the Sale of Goods Act, 1930?
The seller may set the price under the existing agreement.
The buyer may set the price under the existing agreement.
A court must appoint a replacement valuer.
The agreement is avoided.
Answer and explanation
Under Section 10(1), the failure of the agreed third-party valuation avoids the agreement. If goods have been delivered to and appropriated by the buyer, the buyer must pay a reasonable price for them. Section 10(2) gives an innocent party a damages claim where the other party prevents valuation.
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