Page 143 - DCOM103_COMMERCIAL_LAW

Commercial Law

Notes Rights of an Unpaid Seller

The rights of an unpaid seller may broadly be classified under two heads, namely: (i) Rights under

the Secs.73-74 of the Indian Contract Act, 1872, i.e., to recover damages for breach of contract.
(ii) Rights under the Sale of Goods Act, 1930: (a) rights against the goods; (b) rights against the
buyer personally. The rights against the goods are as follows:

Lien on Goods (Secs. 47-49)

The word lien means to retain possession of. An unpaid seller who is in possession of goods is
entitled to retain them in his possession until payment or tender of the price in three situations,
namely: (a) where the goods have been sold without any stipulation as to credit; (b) where the
goods have been sold on credit, but the term of credit has expired; (c) where the buyer becomes
insolvent. Lien can be exercised only for non-payment of the price and not for any other charges
due against the buyer.

Example: The seller cannot claim lien for godown charges for storing the goods in exercise
of his lien for the price.

Right of Stoppage in Transit

This right of the unpaid seller consists in preventing the goods from being delivered to the buyer
and resuming and regaining their possession while in transit, retaining them till the price is paid.
The right of stoppage in transit is earned only where the right of lien is lost and is available only
where the buyer has become insolvent (Sec.50).

Examples: (i) Badal at Delhi orders goods of Anand at Calcutta. Anand consigns and
forwards the goods to Badal. On arrival at Delhi, goods are taken to Badal’s warehouse and left
there. Badal refuses to take the goods and stop payment. The goods are deemed to be in transit
and the unpaid seller can take them back.

(ii) The goods are delivered on board the ship belonging to the buyer. Under the bill of lading the
goods are deliverable to the buyer or his agents. Such a bill of lading is a delivery to the buyer
and therefore, there could be no right of stoppage in transit.

Right of Resale (Sec.54)

The unpaid seller, who has retained the possession of the goods in exercise of his right of lien or
who has resumed possession from the carrier upon insolvency of the buyer, can resell the goods,
(i) if the goods are of a perishable nature, without any notice to the buyer and (ii) in other cases
after notice to buyer calling upon him to pay or tender the price within a reasonable time and
upon failure of the buyer to do so.

14.2 Remedies for Breach of a Contract

In addition to the rights of a seller against goods provided in Secs.47 to 54, the seller has the
following remedies against the buyer personally. (i) suit for price (Sec.55); (ii) damages for
non-acceptance of goods (Sec.56); (iii) suit for interest (Sec.56).

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