1. Rights of an unpaid seller
9/11/2018
Unit II – Sale of Goods Act, Legal Aspects of Business - Mr.K.Mohan Kumar, AP/MBA

2. Rights of an unpaid seller
Rights of unpaid seller:
An unpaid seller is one
who has not been paid/tendered the price
A bill of exchange or other negotiable instrument received but dishonoured or otherwise irregular
Who has got a court decree but not yet satisfied ( or executed)
Any person who is in the position of the seller ( agent or a consignee who had paid for the goods and responsible for the price
An unpaid seller has an immediate right of action for the price.
9/11/2018
Unit II – Sale of Goods Act, Legal Aspects of Business - Mr.K.Mohan Kumar, AP/MBA

3. Rights of an unpaid seller
Unpaid seller has two kinds of rights:
Against the goods
Against the buyer personally
Right against the goods
–a) when the property in goods has passed: Lien, Stoppage in Transit and Re-sale
--b) when the property in goods has not passed: Withholding delivery and Stoppage in Transit
9/11/2018
Unit II – Sale of Goods Act, Legal Aspects of Business - Mr.K.Mohan Kumar, AP/MBA

4. Rights of an unpaid seller
Right against the buyer personally
Suit for the price
Suit for damages
Repudiation of the contract
Suit for interest
9/11/2018
Unit II – Sale of Goods Act, Legal Aspects of Business - Mr.K.Mohan Kumar, AP/MBA

5. Rights of an unpaid seller
Right of Lien:
A lien is a right to retain the possession of the goods until the price is paid. This right is immediate in case of cash sales. In case of credit sales it is after the expiry of the credit period. The right is also available when the buyer becomes insolvent at any time.
Lien depends on actual possession and not on title whether as seller or as his agent or as bailee for the buyer
Possession of the goods by the seller must not expressly exclude the right of lien
Lien can be exercised only for the price and not for other charges ( like taxes, duties)
Seller having made part delivery of the goods may exercise lien on the remainder (unless there is a condition to waive the lien)
9/11/2018
Unit II – Sale of Goods Act, Legal Aspects of Business - Mr.K.Mohan Kumar, AP/MBA

6. Rights of an unpaid seller
Right of stoppage in transit:
This right is available: a) when the buyer becomes insolvent and b) when the goods are in transit.
Insolvency means failure to pay them on the due date whether he has committed an act of insolvency or not
This right is an extension of the right of lien
The carrier may hold goods as an agent of the seller
If the carrier is holding goods as an agent of the buyer, seller cannot exercise the right of stoppage in transit
If the carrier is holding goods in an independent capacity, the seller has the right of stoppage.
Stoppage can be effected by taking possession or by giving notice of stopping
Right of lien or stoppage in transit is not affected by any sale or pledge which the buyer would have made unless the seller has assented to the same.
9/11/2018
Unit II – Sale of Goods Act, Legal Aspects of Business - Mr.K.Mohan Kumar, AP/MBA

7. Rights of an unpaid seller
Right of Resale
When the goods are perishable
When the notice of resale is given to the buyer but buyer does not respond by payment /tender of price within a reasonable time
In case of loss in a resale, seller can claim it from the buyer as damages for breach of contract
In case of surplus the seller is not bound to hand it over to the buyer (buyer cannot benefit from his own wrongs)
Notice is a must or there should be clause in the sale contract expressly reserving the seller’s right of re-sale
9/11/2018
Unit II – Sale of Goods Act, Legal Aspects of Business - Mr.K.Mohan Kumar, AP/MBA

8. Rights of an unpaid seller
Right of withholding delivery:
Where the property in goods has not passed to the buyer, the unpaid seller has a right of withholding delivery
This right is co-existent with the right of lien and stoppage in transit
Rights of the Unpaid seller against the buyer personally:
a) Suit for the Price; b) Suit for damages for non-acceptance; c) Repudiation of the contract before due date and d) Suit for interest
9/11/2018
Unit II – Sale of Goods Act, Legal Aspects of Business - Mr.K.Mohan Kumar, AP/MBA