Risk and Impossibility

[22.01] Risk. Logically, the term ‘risk’ ought to cover both losses and gains as regards the goods which are the subject-matter of the supply contract; but the pessimistic lawyer will usually use ‘risk’ solely in the sense of risk of loss. ¹ In this sense, the ordinary rule of risk is summed up by the Latin maxim res peril domino (risk falls on the owner): it refers to the physical deterioration or destruction, ² or fall in financial value of, goods supplied happening without breach of the supply contract; ³ and its operation may pro tanto override other contractual obligations. ⁴ Whilst also relating to the subject-matter of the contract, the foregoing rule is to be distinguished from both the nemo dat rule (see para 19.11 ) and the rules applicable where one of the parties becomes insolvent (see paras 19.22–23 ).