UNPAID SELLER UNPAID SELLER AND HIS RIGHTS

Who is an Unpaid Seller?Who is an Unpaid Seller?

One who has not been paid (either in whole or partially)

One who has received payment in the form of bill of exchange or other negotiable instrument which has been dishonoured

Rights of an Unpaid SellerRights of an Unpaid SellerWhere property to goods has been

passed Right of Lien Right of Stoppage in Transit Right of Resale

Where property in goods has not been passed

Right of Withholding Delivery Other Rights

Right of Lien-Section 47Right of Lien-Section 47• Two types: General Lien Particular/Specific Lien

• Applicability Goods have been sold without any stipulation to credit Goods have been sold on credit and

terms of credit have expired Where buyer becomes insolvent and

seller has possession of goods

Section 48-Part Delivery of GoodsSection 48-Part Delivery of Goods

Right of lien applicable to undelivered goods unless

an agreement to waive lien has been made

Section 49-Termination of LienSection 49-Termination of Lien Seller delivers goods to carrier/bailee for transmission to buyer without reserving right

of disposal of goods Buyer or his agent lawfully obtains possession

of goods Seller waives his right of lien

Right of Stoppage in Transit-Right of Stoppage in Transit-Section 50Section 50

Essentials Seller must be partially/wholly unpaid Buyer must have become insolvent Goods must be in transit Eg: Seller has parted with possession of

goods and buyer has not received the goods

Section 51Section 51 Duration of TransitDuration of Transit

• Transit ends when: Buyer takes delivery of goods Buyer/his agent takes deliver of goods

before appointed destination i.e. in anticipation Carrier/bailee at appointed destination acknowledges possession of goods Carrier/bailee wrongfully refuses to

deliver goods to buyer/his agent Part delivery has been given in such circumstances

Buyer refuses the goods:Buyer refuses the goods: If buyer refuses goods-transit does NOT come

to an end, even if seller refuses to take them

back. Goods continues to be in possession of bailee

Section 52: How Right of Stoppage in transit Section 52: How Right of Stoppage in transit is is

effected by the seller:effected by the seller: Taking actual possession of goods Giving notice of his claim to carrier/bailee who possesses goods or to redirect goods to seller or according to his directions

Sale generally not rescinded by lien or Sale generally not rescinded by lien or stoppage in transitstoppage in transit

Right of stoppage in transit is lost wheRight of stoppage in transit is lost when:

• Buyer/his agent obtains delivery of goods from carrier/bailee After arrival of goods at appointed destination, carrier/bailee acknowledges to

buyer that he holds goods on his behalf Carrier/bailee wrongfully refuses to deliver

goods to buyer/his agent Part delivery of goods has been made to

buyer/his agent in such circumstances as to show an agreement to give up possession of whole

of the goods

Effect of Sub-Sale or Pledge Effect of Sub-Sale or Pledge by buyer-Section 53by buyer-Section 53

In case of transfer of goods by buyer, the unpaid seller’s right of lien or stoppage in transit can be exercised subject to rights of transferee. When pledgee sells goods, the unpaid seller is entitled to receive the surplus sale proceeds.

Right of Resale-Section 54Right of Resale-Section 54

• When unpaid seller has exercised his right goods

can be resold in following circumstances: Where goods are perishable Where seller gives notice to buyer of his intention to resell and buyer does not pay

the price within a reasonable time after the

notice Where seller has expressly reserved his right

of resale in case of default

If the seller has given due notice to the If the seller has given due notice to the buyerbuyer

He can hold the buyer responsible for loss suffered due to breach of contract Profits earned on resale are retained by

the unpaid seller If notice has not been given,If notice has not been given, Seller loses right to recover damages from buyer Profits arising from resale are to be paid to the buyer

• If possession of goods has not been passed to buyer, seller has the right to withhold delivery.

Section 25-Reservation of Right of DisposalSection 25-Reservation of Right of Disposal This is retained by seller when the seller imposes

certain conditions and until conditions are fulfilled.

Sections 55 and 56-Other RightsSections 55 and 56-Other Rights Sue the buyer for price of goods Seller may sue buyer for damages for wrongfully

neglecting/refusing to accept the goods Recover interest from buyer where there is a specific agreement to that effect. If there is no agreement, seller may charge interest on price

when it becomes due.