Page 144 - DCOM103_COMMERCIAL_LAW

Unit 14: Remedies of Unpaid Seller

Suit for Price (Sec.55) Notes

Where under a contract of sale the property in the goods has passed to the buyer and the buyer
wrongfully neglects or refuses to pay the price, the seller can sue the buyer for the price of the
goods. Where the property in goods has not passed to the buyer, as a rule, the seller cannot fi le a
suit for the price; his only remedy is to claim damages.

Example: A sold certain goods to B for ` 5,000 and the price was agreed to be paid before
the expiry of ten days of the contract. B fails to pay the price within the stipulated time. A can fi le
a suit for price against B even though the goods have not been delivered or the property in goods
has not been passed to B.

Suit for Damages for Non-acceptance (Sec.56)

Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may
sue him for damages for non-acceptance. Where the property in the goods has not passed to
the buyer and the price was not payable without passing of property, the seller can only sue
for damages and not for the price. The amount of damages is to be determined in accordance
with the provisions laid down in Sec.73 of the Indian Contract Act, 1872. Thus, where there is
an available market for the goods prima facie, the difference between the market price and the
contract price can be recovered.

Suit for Interest (Sec.61)

When under a contract of sale, the seller tenders the goods to the buyer and the buyer wrongfully
refuses or neglects to accept and pay the price, the seller has a further right to claim interest on
the amount of the price. In the absence of a contract to the contrary, the court may award interest

at such rate as it thinks fit on the amount of the price. The interest may be calculated from the date
of the tender of the goods or from the date on which the price was payable. It is obvious that the
unpaid seller can claim interest only when he can recover the price, i.e., if the seller’s remedy is
to claim damages only, then he cannot claim interest.

Buyer’s Remedies against Seller

The buyer has the following rights against the seller for breach of contract: (i) damages for

non-delivery (Sec.57); (ii) right of recovery of the price; (iii) specific performance (Sec.58); (iv) suit
for breach of condition; (v) suit for breach of warranty (Sec.59); (vi) anticipatory breach (Sec.60);
(vii) recovery of interest (Sec.61).
14.3 Summary

These conditions and warranties may be express or implied. Thus, sale takes place when
there is a transfer of ownership in goods from the seller to the buyer.
A sale is an executed contract.

The term seller includes any person who is in the position of a seller, e.g., an agent of the
seller, to whom a bill of lading has been endorsed, or a consignee or agent who has paid for
the goods or is responsible for the price (s.45).
The word lien means to retain possession of.
No gain or loss shall be recognized on the exchange of property held for productive use in a
trade or business or for investment if such property is exchanged solely for property of like
kind which is to be held either for productive use in a trade or business or for investment.

LOVELY PROFESSIONAL UNIVERSITY 137