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Even after risk in the goods has passed, the party in possession of the other's goods:
AOwes no duty at all
BMay use the goods freely
CBecomes the owner
DRetains the duties and liabilities of a bailee towards the other party
Answer & Solution
Correct answer: D. Retains the duties and liabilities of a bailee towards the other party
Section 26 preserves the bailee-like duties of whichever party holds the goods, so a possessor must still take reasonable care even after risk has passed.
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