"Risk" in a sale of goods means who bears the loss if the goods are damaged or destroyed, for example, if they are damaged in transit or perish before use. Knowing when risk passes from seller to buyer is vital, because it decides who pays when something goes wrong. Here is a plain-English guide for England and Wales.
Why risk matters
If goods are damaged or lost while at the seller's risk, the seller bears it (and must usually replace them or refund). If the loss happens once risk has passed to the buyer, the buyer bears it, and may still have to pay the price even though the goods are ruined. So timing is everything, and it interacts with insurance.
Business sales: the Sale of Goods Act 1979
For business-to-business sales, the Sale of Goods Act 1979 (s 20) sets the default rule:
Risk passes with property (ownership), unless the parties agree otherwise.
So, by default, risk passes to the buyer when ownership passes (see our guide on when title passes), regardless of delivery. But this is a default rule, businesses very commonly agree something different in the contract, most often that risk passes on delivery, or per the agreed Incoterms® for international sales.
There are refinements:
- if delivery is delayed through the fault of one party, the goods are at the fault party's risk for losses that might not have occurred otherwise; and
- each party must take reasonable care of goods in their possession.
Consumer sales: the Consumer Rights Act 2015
For business-to-consumer sales, the position is more protective of the consumer. Under the Consumer Rights Act 2015 (s 29):
Goods remain at the trader's risk until they come into the physical possession of the consumer (or a person identified by the consumer to take possession).
So for a consumer buying online, the goods are generally at the trader's risk during delivery, if a parcel is lost or damaged in transit, that is usually the trader's problem, not the consumer's. (A limited exception applies where the consumer arranges their own carrier not offered by the trader.)
Why the difference matters
- Businesses should check the contract, don't assume risk passes on delivery; if the contract is silent, the default ties risk to ownership. Agree the point expressly (and insure accordingly).
- Consumers are protected, goods are at the trader's risk until delivered to them.
Practical tips
- In B2B contracts, state clearly when risk passes (e.g. on delivery, or per Incoterms®) and align your insurance.
- Use retention of title for ownership while passing risk on delivery if that suits you, risk and title can be separated by agreement.
- For consumer sales, build in that you bear transit risk, and choose reliable carriers.
Key takeaways
- Risk decides who bears the loss if goods are damaged or destroyed.
- B2B (Sale of Goods Act 1979, s 20): risk passes with ownership unless agreed otherwise, and parties commonly agree risk passes on delivery.
- B2C (Consumer Rights Act 2015, s 29): goods stay at the trader's risk until the consumer takes possession, so transit loss is usually the trader's.
- Spell out risk in B2B contracts, separate it from title if useful, and align insurance.
Sources
- Sale of Goods Act 1979, s 20 (risk passes with property unless otherwise agreed; effect of delayed delivery)
- Consumer Rights Act 2015, s 29 (goods at trader's risk until the consumer takes possession)
- Incoterms® (allocation of risk in international sales)
--- This article is general information about the law of England & Wales as at 2026, not legal advice. For advice on your circumstances, consult a qualified solicitor.