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Rights of an Unpaid Seller
Seller of goods deemed to be an Unpaid Seller
he must be unpaid and the price must be due
he must have an immediate right of action for the price
a bill of exchange or other negotiable instrument was received but the same has been dishonored
‘Seller’ here means not only the actual seller but also any person who is in the position of a seller
I. Rights of an unpaid seller against the goods
where the property in the goods has passed to the buyer, an unpaid seller has the following rights against the goods [Sec.46(1)] :
1. Rights of lien
2. Right of stoppage in transit
3. Right of resale
1. Rights of lien [Sec 46(1)(a) & 47 to 49]
A lien is a right to retain possession of goods until payment of price. [Sec 46(1)(a)]
It is available to the unpaid seller of goods who is in possession of them where :
a) the goods have been sold without any stipulation as to credit
b) goods sold on credit, but the term of credit expired
c) the buyer becomes insolvent [Sec 47(1)]
Rules regarding lien
i. If the seller loses the possession of
goods, he loses the right of lien also
ii. The lien depends on actual
possession and not on title
iii. The possession of goods by the seller
must not expressly exclude the right
of lien
iv. The lien can be exercised only for the price and not for any other charges
v. Where an unpaid seller has made part delivery of the goods, he may exercise his right of lien on the remainder. He may refuse to deliver such remainder till he is paid for the goods already delivered and goods yet to be delivered [Ex parte charmer, (1873) Ch. 291]
vi. Unpaid seller having a lien does not lose his lien by reason only that he has obtained a decree for the price of goods [Sec 49(2)]
Termination of lien [Sec 49]
Unpaid seller loses lien when :
a)he delivers the goods to a carrier or other bailer for the purpose of transmission to the buyer
b)the buyer or his agent lawfully obtains possession of the goods as buyer
c)he waives his right of lien on the goods [Sec 49(1)]
2. Right of stoppage in transit [Sec 46(1)(b) & 50 to 52]
The right of stoppage in transit is a right of stopping the goods in transit after the unpaid seller has parted with the possession of the goods. He has the further right of resuming possession of the goods as long as they are in the course of transit and retaining the possession until payment or tender of the price.
Transit is available :
i. when the buyer becomes insolvent
ii. when the goods are in transit [Sec 50]
The right of stoppage in transit is an
extension of the right of lien but it
arises only on the insolvency of the
buyer and when the goods are in transit
[Sec 46(1)(b)]
Transit comes to an end :
i. if the buyer or his agent in that behalf obtains
delivery of the goods before they arrive at the
appointed destination [Sec 51 (2)]
ii. if, after the arrival of goods at the
destination, the carrier or other bailer
acknowledges to the buyer or his agent that
he holds the goods on his behalf [Sec 51 (3)]
Contd…
iii. where the carrier wrongfully refuses to
deliver the goods to the buyer or his agent
in that behalf [Sec 51(6)]
iv. where part delivery of goods has been
made to the buyer or agent in the behalf,
the remainder of the goods may be stopped
in transit
Sec 52
How stoppage in transit is effected?
Effect of sub-sale or pledge by buyer [Sec 53]
Sale or pledge of goods do not affect right of
lien unless the seller has assented to it
but it is defeated if transferred a document
of title of goods to the buyer and the buyer
transfers it by way of sale to a person who
takes it in good faith and for consideration
3. Right of re-sale [Sec 46(1)(c) and 54]
The unpaid seller can re-sell the goods :
i. where the goods are of perishable nature
ii. where he gives notice to the buyer of his
intention to re-sell the goods and the buyer
does not pay within a reasonable time or tender
the price
iii. where the seller expressly reserves a right of
re-sale in case the buyer should make default
[Sec 54(4)]
Rights of withholding delivery [Sec 46(2)]
Where the property in goods has not
passed to the buyer, an unpaid seller has,
in addition to his other remedies, a right
of withholding delivery similar to and co-
extensive with his rights of lien and
stoppage in transit where the property
has passed to the buyer.
II. Rights of an unpaid seller against the buyer personally
These are the rights which an unpaid seller
may enforce against the buyer personally.
These rights of the seller against the buyer are
called rights in personam as against the rights
in rem (i.e., rights against goods) and are in
addition to his rights against the goods.
The rights in personam are as follows :
Right in personam
1. Suit for price [Sec 55]
i. where property has passed
ii. where property has not passed
2. Suit for damages for non-acceptance [Sec 56]
3. Repudiation of contract before due date [Sec 60]
4. Suit for interest [Sec 61(2)(a)]
Rights of an unpaid seller
Rights of an unpaid seller
Against the goods
Against the goods
goods - passedgoods - passed
Suit for price
Suit for price
LienLien
Suit for damagesSuit for
damagesRepudiation of contractRepudiation of contract
Against the buyer
personally
Against the buyer
personally
Suit for interestSuit for interest
goods – not
passed
goods – not
passed
Rights of an unpaid seller
Rights of an unpaid seller
Re-saleRe-saleStoppage in transit
Stoppage in transit
Stoppage in transit
Stoppage in transit
Withholding delivery
Withholding delivery
