Page 137 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes the seller, the carrier or other bailees in possession must redeliver the goods to, or according to
the directions of the seller. The expense of such redelivery shall be borne by the seller.
Effect of sub-sale or pledge by buyer (s.53). The general rule is that the unpaid seller’s right of lien
or stoppage in transit is not affected by any sale or other disposition of the goods, which the
buyer may have made, unless the seller has assented thereto.

Example: Anil sells to Balbir 10 quintals of grain out of a granary. Balbir then sells (out
of 10 quintals) 6 quintals to Chand. Chand after receiving from Balbir the delivery order presents
it to Anil. Anil tells Chand that the grain would be delivered in due course. Balbir then becomes
insolvent. Anil’s right against the 6 quintals is lost since he recognised the title of Chand-the
sub-buyer.
The above general principle is, however, subject to certain exceptions. These are:

1. where a document of title to the goods has been issued or lawfully transferred to any
person as buyer or owner of the goods and that person transfers the document to a purchaser
in good faith and for valuable consideration, the unpaid seller’s right of lien or stoppage
in transit is destroyed;

2. where the document of title to the goods issued, or lawfully transferred to the buyer has
been transferred by him, to a bona fide purchaser for consideration, by way of pledge, the
right of lien or stoppage in transit can only be exercised subject to the right of the pawnee.

Table 5.2: Lien and Stoppage in Transit

Lien Stoppage in Transit
1. Available only when the goods are in the Available only after the seller has parted with
possession of the unpaid seller the possession of the goods.
2. Available, even when the buyer is not Available only when the buyer becomes
an insolvent. an insolvent.

5.7.4 Right of Resale (S.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. The seller is entitled to recover from the original buyer
damages caused to him by the resale. But if any profit accrues from the resale, such profit shall
go to the unpaid seller and not to the buyer. The seller is not acting as the agent of buyer.

!
Caution The notice of resale to the buyer, however, is necessary except when goods are of
a perishable nature.

In case the seller resells the goods without giving the notice to the buyer, he shall not be entitled
to recover damages from the buyer for any loss on resale, nor shall be entitled to pocket any
profit that may accrue on the resale. The profit, in such as case, shall go to the buyer. In any case,
the buyer (who buys in case of resale) acquires a good title to the goods as against the original
buyer, notwithstanding that no notice of resale has been given to the original buyer. No notice
of resale to buyer is necessary in case of perishable goods. The word ‘perishable’ is not confined

130 LOVELY PROFESSIONAL UNIVERSITY