The fundamental operation of human nature is commercial trade. People living in different geographical areas and locations try to bring improvement in their financial worth and overall business outcomes through the development and establishment of the networks related to the trade. Shipping of goods and products is quite common between different countries that exclusively provide other benefits and advantages. Somehow in the selling and trade-related operations, some risk factors are associated. Buyers and sellers need to consider these risk factor in the beginning and during the commercial law contracts thus both parties (buyers and sellers of the goods, property, or any tradable asset) can mitigate risk factor in the most effective manner. The present work is consisting of critical assessment of passing of risk in commercial law and transfer of risk from seller to buyer in commercial contracts. Present work will also conclude research findings extracted from the authentic sources to elaborate on the limitation and reasons for passing and transferring of risk in the trade of goods and property. Work will also discuss whether the buyer should be given responsibility of damages or not (in the trade of goods or property)?

Literature Review of Risk & Business Law Risk

Passing and Transfer of risk in commercial contract and law

Risk is a complete term that relates to different scenarios in different ways and provides different meanings. In the commercial contracts and law related risk is the degree representing the information about the extent to which a company or parties (buyer and sellers) involved in the sales or trade process can get negative influence. Theories elaborating on the concept of risk conclude that risk, as a rule, covers causal derange and loss occurred in the process of transition. Furthermore, risk also covers the wrongful goods delivery to the irrelevant person. An irrelevant person in the commercial contract of trade can be a person who is neither buyer of goods or property nor seller of these assets.[1]

The prime purpose behind the legal objectives of the contact is to ensure the transfer of ownership right to the buyer from the seller of the goods or property. The timing of transfer becomes crucial when things went wrong. For instance, take the example of the situation in which buyer or the seller of goods or property goes into liquidation before the goods are completely transit. In such situation creditors, (to whom buyer or seller owe a liability or obligation) of the insolvent party will have the desire to get information regarding the ownership right of the property or goods. Creditors give attention to this kind of information because they want to ensure the liable person for liquidation related issues.

Furthermore, they also have to determine whether the traded goods will form part of his estate. In case it is right and buyer/seller has liability in liquidation issue then solvent party to the sale contract would have to prove for the loss and liquidation issues. The passing of risk in the sales of goods and trade of property also relates to the damages and loss of property. For instance, the legal right of the seller to demand the actual price highly depends upon whether the property has passed. In addition, the right of the buyer to sue the carrier for tangible damages and financial loss of the property or goods also highly depends upon the establishment of ownership. Other than these, the passing of property also determines the risk allocation (somehow these kinds of rules related to passing and transfer of risk factor are displaced in the international sale contract.

So GA 1979 Representation the transfer of ownership to related rules and regulations

The So GA 1979 represents the transfer of ownership to related rules and regulations. The act discussed earlier also draws out the variance and difference between specific goods and ascertained goods. The ascertained goods represent the goods that are identified by the generic description. Furthermore, it would also relate to the large bulk staff that is not completely segregated as yet. While on the other hand, specific goods related ownership rules are different. Specific goods are the special kind of goods which need to be identified prior to the remaining process of drawing contract for the legal ownership. Thus, in short, the contract of sales are concluded in the process after the complete identification of goods. The risk factor can draw a negative impact on the passing of ownership and trade of property. The allocation of risk between buyer and seller ought to distinguish the passing of ownership. Even then the process of transfer is possible to be carried out simultaneously.[2]

Basically, critical analysis of the concept of the passing of risk indicates that a commonly assumed meaning of "passing of risk" is the transfer of risk from the seller of the goods or property to the buyer of that asset. It particularly relates to the transfer of responsibility between the two parties. When a buyer purchases goods or property then seller transfer the responsibility and obligations to the buyer with a clear purpose that from now on buyer would have the responsibility of damages and financial loss. The passing of risk meant for transfer or conveyance of responsibility and obligation about the deterioration and damages occurred without the fault of either party. In accordance with the S20 SoGA 1979, risk will pass with the actual goods or property excluding the international cases. In international contracts, the risk does not pass with the property and goods. Moreover, before the goods and property get ascertained risk can pass. In accordance with the research and analysis of the concept associated with the transfer or passing of risk, it is clear that risk can pass at any rate where the property and goods form part of a bulk and identified goods. In CF contracts and contracts of FOB, the risk passes on the shipment and freight. Even then it is also clear that property and risk transfers and pass in this stage. Somehow, it becomes significant and important as ownership and risk are concerned with the unsegregated parcels. There can be three possible reasons and situation that require special mention:

Risks in contracts of FOB

1) Firstly, risk pass on the specific stage in the out-turn contracts. The stage is particularly related to the delivery of goods. In this stage, sellers are physically obliged for the delivery of goods at the discharge ports.

2) Secondly, risk related to the deteriorated will be dealt with by the buyer of the property and goods. In accordance with this concept, buyers are responsible to pay for the deteriorated and damages at the time when the sales contract was almost done. For instance, take the example of shipment or freight in response to the. The CIF highly concerned towards the goods sales and trade makes new buyer responsible for risk even the damages were related to the time duration when the buyer was not the owner of the project.

3) Thirdly, the time of arrival at the discharge port is basically known as the delivery period. For instance, in the CIF type oil contracts, responsibility and ownership will be delegated to the new buyers after the process of shipment rather than during shipment or freight.[3]

Somehow, risk of deterioration and contamination on the voyage will still certainly fall on the buyer. Considering this risk mitigation and control it would be required to be done by the managers of the businesses to ensure commercial contract and law regarding the passing of risk and ownership at the right moment, therefore, companies also face advantages. The obligation of the shipped goods and freight is linked with the various kind of situations that varies most of the time with opportunities and specifications. Take the example of a vessel that is required to be delivered within the specified time duration to the new buyer. In case vessel falls and get damages during shipment and before shipment then the buyer of the vessel will not have obligations as it would be under the obligation of the seller. The key responsibility of the seller related to the transfer of ownership and passing of risk is to ensure payment of the obligation even the goods were already transferred.

The term risk is really conservative and narrow which is in general related to the determination of fact that who is responsible for the casualty to the goods which is not from an act or omission of the other party. Under the acts and laws presented in Article 66 and Article 96 of ULIS, all risks are must to be tolerated and handled by the buyers to pass risk towards the buyer. The buyers are required to deal with all risk factors and damages to obligation pursuant. In accordance with the convention, the buyers are required to pay for the damages in case the object of the contract is lost or damaged. In fact, destruction to the property and goods subsequent to the risk passing will not provide relief to the buyer of goods and property from paying the prices and amount of damages. The article 58(1) is also related to the convention and buyer role in the passing of risk. Under the convention concept and article 66, buyers are required to pay obligations and the amount of damages even the damages are caused by the seller.

Limitations and significance in contract of Risk & Business Law Risk

In accordance the analysis of risk concept in the trade process and transferring of ownership we can conclude that a passing of risk related research should be dependent upon the highly practical considerations and specifically it should not take further proceeding towards transmit of ownership. In such a situation, the most appealing solution is that the owner or seller of the property or goods get registered insurance policy. An insurance policy covering all possible expenses and cost will make it possible for the both parties the buyers and sellers to have a limited loss in the form of an obligation paid by the party to the creditors. In accordance with the findings and analysis, we can say that parties conduct negotiation and develop sales contract between parties that can pose a risk factor sometimes. The implicitly referred incidents of the contract ensure the purpose of risk allocation. There is some reasoning behind the passing of risk between the seller and the buyers of the goods and property. In the English countries, risk allocation related reasons are given high importance because of some limitations and significance. In accordance with the conducted research, mercantile contracts are briefly created contracts that can provide provision to the important concerning points.[4]

Goods are shipped from a distance just on the basis of the contract. Such mercantile contracts are burning questions because of the security related issues and obligation related concerns associated with the mercantile contracts. Where goods are shipped? Whether risk can cause damages? And in case of risk can cause damages then who should have to take the responsibility. Furthermore, in European English countries it is decided that such activities should be done only in the best interest of both parties. Other than rules and acts defined in the commercial contract it is better to provide flexibility and divisibility to the commercial contracts. Agreement of parties that can be also referred to jusdispositivum is best to abrogate risk factor. In short, liberty of contract is now an old fashioned principle. The important characteristics of the commercial law are its freedom and flexibility to contract out the regulations set out by the local and international market. Basically, flexibility and freedom are important characteristics as it makes the buyers and seller capable to separate the passing of risk from the transfer of an actual asset or the property. Now modern strategies and rules have made it difficult to fix agreement of the parties. The overview and provisions of this section (section 2-509(4) are subjected to the contrary agreement.

Risk identification on section 2-509 of Risk & Business Law Risk

The section 2-509 is also related to the passing and transfer of the risk for sold gold. The loss assigned as the obligation of buyer is a controversy variable among with local markets and international markets[5]. The parties are emphasizing that buyer should not be given obligations in case of prior possession of goods and property. Basically, the idea is that the buyer should not be given responsibility to fulfill the loss of what they never planned for. But the reality is that suffering loss in agreement because of the seller can reduce profit margin. It is obviously quite uncommon for the sellers to have the interest and add some value in the goods once these goods are shipped. But for buyers, some breakage can cost directly and the profit margin can be decreased as breakage will require extra funds from the buyers which were not in the plan. In such a situation, some parties claim for the security of seller’s right as he no longer has control on the safety of the goods. Furthermore, unavailability of insurance is also a key contributing factor that encourages the opposite parties to accept that sellers should not meet obligations because of their limited role and interest in the ownership of already issues or sold goods. Some situations and unusual features sometimes attempted to deduce and limit the agreement of passing and transferring risk from some specific contractual incidents.

Some common types of commercial contracts related to the trade of goods and property in the light of transferring risk and passing risk factors are shipment contract and destination contract. The shipment contract is relatively simple and more logical as compared to the special contract of destination contract. In the international trade and local trade, several contracts are in use by the buyers and sellers (both parties) for the passing of risk and obligations. Critical analysis of the both kinds of contracts shipment contract and destination contracts indicate that it is not an easy task to identify the category of these contracts. Sometimes because of the difficult terminologies used in the contracts makes it difficult to identify whether a contract is a shipment contract or a destination contract[6].

Effects of transfer of risk in commercial contract of Risk & Business Law Risk

The effect of transferring the risk is very much important in the business pint of view as all those risks are become the reason of earning the profit of hat party who having or facing the risk with complete descriptions. Related to commercial law transfer of risk, this is most complex issue to transfer the risk from one party to another. In the contract law world, the risk word is going to be a cult concept. But it is very important to understand that what the meaning of passing the risk is and also explain what it show effects on the commercial contract. In the period of time when the goods or digital content suffer any damage of loss through any accident, the seller is not taking the obligation of loss goods and discharge through its performance. So delivery risk or risk of performance is also the part of commercial contract. But normally when the risk is using in the contract that means that risk of payment or cash risk. In general terms, the buyers have to face all type of risk of payment or risk of counter performance. In the commercial contract, normally all type of risk must be bear by the buyer as if due to accident any goods lost then he only receives the damage goods and also pay for such goods.

In such situations, normally seller refuse to take the obligation of damage goods and buyer have to bear these goods. And with receiving the damage goods he also has to pay complete amount because this will mention in the contract so it clearly explain that risk is going to transfer from seller to buyer. Seller only face the damage for loss when he never receive the complete amount of sale as not mention in the contract and some part of lost goods also suffer by the seller. So it is very important to understand that at whet time the risk is passing so the remaining transactions will depend on that. Conclusion of the contract is also very important as some time when the buyer receive the goods at international place then he receive all the risk when he receive the goods not at the time of conclusion of contract and sometime the place is not manageable that goods transfer from one place to another safely. So at that time also the buyer has to face the risk of lost goods.

Risks of current comparative law

So, it depends on the situation not conclusion that the buyer receives the goods. It is general perspective that risk is transfer with the ownership. So it means that when the ownership is going to transfer then the risk also moves with the ownership. This is a legal criteria that implement this rule. But under current comparative law, the passing of risk to ownership create many problems with the regulating system. So passing the risk is the obligation of hat party who deliver the goods and sometime misleading is used to resolve this matter. The buyer is responsible for all the risk that belongs to goods in accordance with the present law and provision of the contract.

Two elements are very important to understand while passing the risk that are identification of goods or digital content to contract and effect of passing risk. The legal effects of transfer the risk also explain that after the risk has passed to the buyer, the obligation of pay the price is not discharge in case of loss or damage of goods or digital content if it is going to explain that the seller is responsible for all such activities due to its act or omission. Seller is responsible for all type of conformity lacking when the risk is going to transfer from seller to buyer under the contract.[7]

Partial breach responsibilities

Accordingly, to law, it is clearly explaining in the rule that price risk is always present that buyer has to face the risk of price once the possession of goods transfers from seller. It also depends on the contract that in what way the risk is going to passed. But in any contract all the legal laws and effects are the same and buyer has to face the price risk and pay for all goods and digital contents whether they all are ok or some are damage due to any reason. Another situation also exists when the seller is responsible for all damage or loss and he also pays for the damage goods and the buyer is not responsible for any such obligation. Due to a total or partial breach of its obligation to deliver, the seller is responsible for the damage or loss of goods. Especially when the seller never transfers the goods in proper packaging.

The packing of the goods is depending on the seller and its decision so if the goods a lost or damaged due to poor packaging then the seller is responsible for the lost goods. Seller is also answerable for all those who are involved in the selling of goods like employees and workers. In all the cases it is very important to understand that the contract is going to breach and the seller is responsible for this breach of contract. If according to the legitimate exercise of a legally granted right, the rule will not apply if the loss or damage happens due to seller legal act. It is also explained that loss is going to relate with the physical; damage so if the buyer didn't' receive the goods then the loss is going to happen. The act of state for the goods didn't involve any loss or damage. As in international trade law not agree with the concept of loss or risk issues. At the international level, the trade occurs in the contract and follows all the terms and conditions that must be mention in the contract and both parties have to follow all the term and conditions legally.

Identification of goods and digital content

When any legal transaction is going t happen in the form of contract then it is very important to clearly explain all the items and terms that are used and applied in parties. In this regard, it is very important to know what sort of good so r digital content is going to deliver with the transfer of risk. Because these goods or digital content are going to transfer through the legal contract so proper identification is very much important in this regard. The identification of goods and digital content also protect both seller and buyer. Buyer is protected with the claims that are unjustified from the seller and seller is protected because it identified the goods before delivery and in case of any failure it sets the limits of the liability potentially. The seller must have identified all the goods or digital content in the contract with clear terms so no confusion remains and any problem will never arise between seller and buyer related to goods and its quality.

Identifying the transferring goods

The seller has to face the loss or damage risk if the carrier not identified the transferring goods so with passing the risk of sales also involve the carriage. So it can be said that the passing risk belongs to the identification of goods or digital content in the contract. So in case of any loss or damage, proof must be present that both parties will know the type of goods and its nature. The identification may happen through different processes like identification happen with the packaging of goods at the time of shipping, through a notice that seller gives to the buyer about the products or goods and this identification is done in the initial agreement that happens between seller and buyer before actual sales.

Effect of Passing of Risk

Effect of passing risk is somehow become positive and as well as very important to happen in-laws and other commercial markets. risk play a very major role and it has been to be managed wisely. Risk is defined as the procedure which includes the identification, assessment and controlling problems of capital and earnings. These types of risk problems and risks causes' monetary unreliability, licit duties, deliberate, natural disasters and accidents. That is why commercial trade makes alleviation of these threats their top priority. All internal and external environments that modify how the commercial trade works including all the demand and supply, customers, business orders, management, and employees are included in a risk management environment. External environment includes all the outside impacts or circumstances that influence the operation of commercial trading.

A risk profile shows the measurement of willingness to take a risk and the threats which are to be faced. It could be a profile of an individual or an organization too. It also helps an organization in the allocation of resources. Risk aversion is defined as the behavior of consumers and investors when they face risk. It is difficult to make decisions in a situation of risks. It could be due to a powerful entrant, high-tech changes, intruding into the switch in customer's desire, market, changes in the fare of raw materials, or any number of other extensive stakes. we have to make set some expectations which help the organization as being a benchmark. It helps the organization to decrease risk aversion. There should be a strong communication relation between innovators and policymakers of the organization. This would be the best solution to reduce risk aversion. It includes introducing new inventions and ideas to an organization which encourages the organization to be more successful.

Risk analysis is the process which helps to find and manage risks before implementing different programs and strategies in the organization. The two types of analysis of risk management are described below.

It includes identification of the risks and threats that could be faced ahead. It includes human threats like (illness, death, injury, etc.), operational threats, reputational, procedural, natural, political, structural and many other types of threats and risks. It deals with estimating and calculating the probability of the occurring event. Value includes health, wealth, emotions statuses, etc. it could be gained or excluded whenever we take a risk. There are many types of risks in the business environment. Some of them are described ahead.

A key risk indicator is a tool which indicates how much risk is present in an activity. Innovation risk is defined as the threats which are faced by the organization when it is being innovated. These threats are from the competitors or from any outsource factor that may disturb the working of the organization. There are many threats and problems which arise in the innovation of the organization. They are to be managed properly on time. If they do not be focused and maintained on time, then they are not able to do work properly.

Commercial trading scheme

The risk which arises when a commercial trading scheme turns into slight productive and in the result, it scuffles to achieve its objectives. The disclosure of legit forfeiture, financial abandonment, and material loss a firm or a commercial trade concern faces when it lacks to follow rules and regulations and internal policies. Risk focuses on unanticipated failures in daily programs and procedures. It can be a technical fault, for example, a server outage, or it can be done due to the people or procedures. These risks can be solved by authorization as well as by keeping the system stronger. risk refers to extra costs or lost revenue. It deals with the money flow that moves in and out of our and in circumstances

An essential element of a commercial trading institution. If the reputation of the institution is somehow damaged, it wouldn't be a good situation. Sudden loss of revenue could happen. A buyer would not prefer doing deal with the commercial trading institution. There are specifically designed strategies to, manage risk factors in an organization. Risk management strategy for any special purpose project is a high-rank plan that deals with tools and methods for identification, analyzing and diminishing negative circumstances (threats) that can molest the project while enhancing positive circumstances (opportunities) that can potentially upgrade the project.

Risk tolerance is defined as the rank of risk-targeted by an individual or an organization. To manage risk doesn't always mean to lower risk because taking risk is the foundation whether dealing with personal issues or doing any business project. The main goal is to enhance the risk-reward of the business. A high-risk investor is a person who is able and willing to tolerate prospective loses up to 50% of their business to enhance their gains. A low-risk investor is a person who is not willing to tolerate the prospective loss of their capital.

They prefer to save their investments such as insured accounts which provides potential returns. Individuals who are needed to upgrade a startup organization, they need to tolerate a high amount of risk. The business should be this much set that it could give a high level of potential return. Megaprojects are very high budget projects and are made for public safety. Due to which they have a very low amount of risk tolerance. That is why the organization has to work intensively to control risk tolerance. These projects are the type of very high budget projects. But it also has a huge risk tolerance level as it needs a specific kind of high-level skills in it.

CONCLUSION on Risk & Business Law Risk

The whole discussion concludes that trade of property and goods among different countries and local market involves some specific limitation and barriers. The legal and commercial law system are difficult concepts that need to be addressed by the buyers and seller while buying and selling goods and property (or any kind of asset in the international and local market). Whenever sellers sell a property or goods to the buyers they also transfer ownership rights. Sellers also pass on duties and responsibilities to the new buyers to make them capable to deal with the new goods and property following their plans. Sellers has limited liability after the start of the transfer process. In case of liquidation problem and creditors related issues, the liable person will have to face legal obligations. Furthermore, in case of damages and loss buyer would have the responsibility to bear the loss and pay damages even the damages occurred before the transfer of the ownership or during the shipment process. Sellers have limited liability that only relates to the before sale process and decisions.

Risk has a great impact on making commercial laws improper and idealized. Risk analysis is the process which helps to find and manage risks before implementing different programs and strategies in the organization. .It includes identification of the risks and threats that could be faced ahead. It includes human threats like (illness, death, injury, etc.), operational threats, reputational, procedural, natural, political, structural and many other types of threats and risks. It deals with estimating and calculating the probability of the occurring event.

Risk plays a vital role in our daily lives as well as in organizations. Without taking risks, no individual or no organization can set their roots towards success. Organizations need different innovations to be encouraged so it could be able to attract customers and make them retain for a long time. Organizations should make such strategies which would help them to mitigate risk and such threats from their organization. In all the situations of daily life or programs of organizations, we do have both circumstances; threats and opportunities.

A risk manager is a person who takes care of alleviation of risk while diminishing the impact of threats and increasing opportunities. He also designs a high-quality plan of how the organization would manage risks and opportunities during the span of the project. Opportunity is defined as the chance to do something. Opportunities in the management of projects in an organization are the methods and instruments which helps a risk manager to recognize and comprehend possible developments in the goals and objectives of the project. Threats include all the problems and bad situations that could be occurred in the organization. Threat management in an organization deals with recognizing and diminishing the negative circumstances; that are risks.

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Progri, I. (2011). Geolocation of RF Signals: Principles and Simulations. Springer Science & Business Media.

Sridhar, V. (2012). Web-Based Multimedia Advancements in Data Communications and Networking Technologies. IGI Global.

Tolhurst, G. J. (2016). The Assignment of Contractual Rights. Bloomsbury Publishing.