Analysis On The Risks Of Damage And Losses Of The Targeted Matter In Purchase And Sale Contracts

In a purchase and sale contract, the issue who shall bear the risks of damage and losses of the targeted matter is of great significance to the parties, which is concerned with their basic rights and obligations.There are three major theories to deal with the issue of the bearing of the risks: (1)when the contract is entered into, the buyer shall bear the risks. The advantage of this theory is that it can make the buyer to receive the targeted matter as soon as possible. However, if the seller does not have the obligation to transfer the targeted matter to the buyer promptly, it will be unfair for the buyer to take the risks. The targeted matter is possessed by seller, the buyer can neither take measures to protect the targeted matter nor have any chances to benefit from it. (2) when the ownership of the targeted matter is transferred to the buyer, the risks shall be borne by the buyer. It overcomes the disadvantages of the former theory to some extent. However, there are still defects. When the ownership and the possession of the targeted matter are not enjoyed by the same party, it will be unfair for the owner to take the risks when the other party possesses the targeted matter. (3) when the targeted matter is delivered to the buyer, the risks shall be borne by the buyer despite whether the ownership is transferred or not. This theory is widely adopted by modern countries.As for the issue of the bearing of the risks of damage and losses of the targeted matter, Contract Law of PRC adopts the doctrine that the risks shall be borne by the buyer if the targeted matter is transferred to the buyer. Besides that, Contract Law of PRC also provides some special provisions to regulate the bearing of the risks. For instance, in the stock afloat transaction, the risks are transferred from the time the contract is made instead of the time of the transfer of the targeted matter. Contract Law of PRC also stipulates that the bearing of the risks will be influenced if one party breaches the contract.However, the stipulations of Contract Law of PRC can not be so comprehensive that every case can be covered by it. And therefore, we should use our legal knowledge to analyze cases in real practice to solve the problems concerned with the bearing of the risks of damage and losses of the targeted matter.