CAA01/S5

The normal rule is that expenditure is incurred on the date on which the obligation to pay becomes unconditional.

A person buying goods is legally required to pay for them on delivery unless there is a special agreement as to terms of payment. If the buyer is legally required to pay on delivery the obligation to pay becomes unconditional when the goods are delivered.

If goods are sold subject to reservation of title (a Romalpa contract, see CA11700) the obligation to pay becomes unconditional when the goods are delivered. The supplier has then fulfilled his or her part of the contract. This means that the buyer incurs capital expenditure as soon as the goods are delivered.

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