UNPAID SELLER AND
HIS RIGHTS
• Seller: A person who sells the goods or agrees to sell the goods is called seller.
• Unpaid :- It means payment is not made or without payment. In simple words,
"Unpaid seller" means a person who has sold the goods for a price but price
has not been paid to him. Sales act defines the "unpaid seller" in the following
words :Unpaid Seller Is A Person :-i. To whom the whole price has not been
paid or tendered, and where a bill of exchange or other negotiable
instruments has been accepted by him as a condition on which it was
received has not been fulfilled by reason of dishonor of the instrument or
otherwise.
• EXAMPLE: Party A sells a car on cash basis to party B and the price has not
been received yet.
RIGHTS OF UNPAID SELLER
• Rights of unpaid seller:- Right against goods Right against the buyer personally When
the property in the Suit for price goods has been transferred Right of Lien Suit for
damages for non acceptance Right of stoppage in goods in transit Suit for special
damage Right to resale and interest When the property in the goods has not been
transferred Right of withholding delivery.
• Right against the goods:- When the property in the goods has been transferred
• 1.RIGHT OF LIEN[Sec 46(1)(a) and 47 to 49]The right of lien means lawfully right to
retain the goods possession until the full price is received. An unpaid seller can exercise
his right of lien in following cases.Sec47-49.
• Where the goods have been sold on the cash basis.
• Where the goods have been sold on credit basis and the term of credit has expired.
• Where the buyer has become insolvent even if the period of credit has not been expired
Cont.
• Other rules to satisfy the conditions for this right are:-
• The unpaid seller must be in actual possession of the goods sold.
• It can be exercised even If the documents of title have been delivered
to the buyer.
• It can be exercised for the price and not for other expenses.
• If the seller delivers some goods, it can be exercised on the
remaining.
• Termination of right of lien:-Seller’s right of lien is terminated in following cases.
• 1. When he delivers the goods to the carrier or other bailey for transmission to
the buyer.
• 2. When the buyer or his agent lawfully obtains the possession of the goods.
• 3. When seller waives his right of lien on the goods.
• 4. The right of lien once lost will not be restored.
• 5. When the buyer further sells the goods and the seller agrees.
• Example: A seller ” sells a TV set to “B” and delivers it to “B” and since the TV set
was not functioning properly , “B” delivered it back to “S” for the repairs. It was
held that “S” can not exercise his right of lien over TV set.
2.RIGHT OF STOPPAGE IN TRANSIT[Sec.
50 to 52]
• It means stoppage of goods while they are in transit to take
possession until the price is paid (sec.50-52)
• Unpaid seller can stop the goods in transit in the following cases.
• 1. While the buyer becomes insolvent.
• 2. While the goods are out of actual possession of seller, but have not
reached buyer’s possession i.e. goods are in transit with career.
• 3. The unpaid seller can stop the goods in transit only for payment of
the price of the goods and not for any other charges.
Cont.
• The unpaid seller can not stop goods in transit in following cases.
• 1. When the goods reaches the destination.
• 2. While the buyer or his agent takes possession of delivery even if it is not
reached destination.
• 3. In case the carrier is agent of the buyer, the transit comes to an end the
instance carrier receives the goods and seller can not stop the transition.
• 4. Carrier’s wrongful refusal to deliver goods to the buyer
• Example:”A” sells TV set to “B”. “A” delivers the TV to the carrier to carry it
to “B”. Later on gets news that “B” has become insolvent; “A” can stop
delivery.
3.RIGHT TO RE-SALE
• If a buyer fails to pay or offer the price within a reasonable time, the
unpaid seller has the right to resell the goods in the following
circumstances.
• 1. Where the goods are of perishable nature.
• 2. Where the unpaid seller has exercised his right of lien or stoppage
in transit and gives a notice to buyer of his intension of resell the
goods.
• 3. Where the unpaid seller has expressly reserved his right of resale.
4. Where seller gives notice to the buyer of his intension to resell and
the buyer does not pay within a reasonable time, he can:-
Cont.
• a) Recover loss on resale of the goods, if any b) Retain any surplus on
resale of goods, if any however, if the seller sells with out the notice
to the buyer, he can not a) Recover any loss of the goods, if any b)
Retain any surplus on the resale of the goods, if any Example” sells
100 blankets to “N” and gives him one week for payment. “N” does
not pay. “M” can resell those to any other person.
Cont.
• B. When the property in goods has not been transferred RIGHT OF
WITHHOLDING DELIVERY: If the property in the goods has not passed
to the buyer, the unpaid seller cannot exercise right of lien ,but gets a
right of withholding the delivery of goods, similar to and co-extensive
with lien. Rights against the buyer personally There are some rights
which an unpaid seller may enforce against the buyer personally.
These rights are called RIGHTS IN PERSONAM SUIT FOR PRICE[Sec.
55]Where ownership of the goods has passed to the buyer and the
buyer refuses to pay the price according to the terms of the Contract,
the seller can sue the buyer for price, irrespective of delivery of the
goods.(Sec. 55).
SUIT FOR DAMAGES FOR NON-
DELIVERY[Sec.56]
• Where the buyer refuses to accept and pay for the goods, the seller
may sue him for damages for non acceptance. The seller can recover
damages only and not the full price (Sec. 56)
SUIT FOR SPECIAL DAMAGES AND
INTEREST [Sec.61]
• The seller can sue the buyer for special damages where the parties
are aware of such damages at the time of contract. The unpaid seller
can recover interest at a reasonable rate on the total unpaid price of
goods, from the time it was due until it is paid.(Sec. 61)
•THANK YOU
