Abstract

The Sale of Goods Act, 1930 is an act to define and amend the law relating to the sale of
goods. Contract for the sale of goods are subject to the general legal principles of the
Contract Act, which are offer, acceptance, capacity of the parties, free consent, consideration
etc. Earlier, The Indian Contract Act, 1872 embodied very simple and elementary rules
relating to the sale of goods. But later, the developments of modern business relations found
the Indian Contract Act inadequate to deal with the new regulations or give effect to the new
rules or principles. With this the provisions relating to the sale of goods contained in the
Indian Contract Act, 1872 were repealed. Later, Sale of Goods Act, 1930 came and all the
repealed provisions were re-enacted by the same Act. Section 45 of The Sale of Goods Act,
1930 deals with the concept of unpaid seller. Also the Act discusses all the rights of the
unpaid seller against the goods and the buyer personally. To explain and analyze the rights
of the unpaid seller is the object of the paper.

KEYWORDS: Sale of Goods Act, 1930, Unpaid Seller, Rights of unpaid seller

Introduction

Mercantile Laws are those laws that govern and regulate trade and commerce. Such laws deal
with the various rights and obligations of the parties to a mercantile agreement. Indian
Mercantile Laws covers various Acts like:

1. The Indian Contract Act, 1872

2. The Sale of Goods Act, 1930
3. The Partnership Act, 1932
4. The Companies Act, 1956
5. Copyright Act etc.

Originally, the laws or provisions relating to the sale of goods or movables were contained in
the chapter VII (Section 76 to 123) of the Indian Contract Act, 1872. Basically, contract for
the sale of goods are subject to the general legal principles of the Contract Act, which are
offer, acceptance, capacity of the parties, free consent, consideration etc. The Indian Contract
Act, 1872 embodied very simple and elementary rules relating to the sale of goods. But later,
the problem has been emerged due to this. The developments of modern business relations
found the Indian Contract Act inadequate to deal with the new regulations or give effect to
the new rules or principles. With this the provisions relating to the sale of goods contained in

1
the Indian Contract Act, 1872 were repealed. Later, Sale of Goods Act, 1930 came and all the
repealed provisions were re-enacted by the same Act.

The Sale of Goods Act, 1930 went through the various amendments and adaptation orders in
due course. The latest one was the Multimodal Transportation of Goods Act, 1993.

The Sale of Goods Act, 1930 is an act to define and amend the law relating to the sale of
goods.1 Section 12 says that the Act extends to the whole of India except the State of Jammu
and Kashmir and came into force on the first day of July, 1930. The Act lays down special
provisions governing the contract of sale of goods. The general law of contract is also
applicable to contracts for the sale of goods unless they are inconsistent with the express
provisions of the Sale of Goods Act. The Sale of Goods Act, 1930 comprises of total sixty six
sections. A contract for sale of goods has, however, certain peculiar features such as, transfer
of ownership of the goods, delivery of goods rights and duties of the buyer and seller,
remedies for breach of contract, conditions and warranties implied under a contract for sale of
goods, etc. These peculiarities are the subject matter of the provisions of the Sale of Goods
Act, 1930. Section 43 defines the contract of sale of goods. It says that for contract of sale
there are some requirements. Like:

1. There must be at least two parties

2. The subject matter of the contract must be goods
3. Price
4. Transfer of property in goods
5. Absolute or conditional
6. All other essential elements of a valid contract.

1
Avtar Singh, LAW OF SALE OF GOODS, 7th ed., 2011
2
Short title, extent and commencement (1) This Act may be called the Sale of Goods Act, 1930.
(2) It extends to the whole of India except the State of Jammu and Kashmir.
(3) It shall come into force on the first day of July, 1930.
3
Sale and agreement to sell.- (1) A contract of sale of goods is a contract whereby the seller transfers or agrees
to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-
owner and another.
(2) A contract of sale may be absolute or conditional
(3) Where under a contract of sale the property in the goods in transferred from the seller to the buyer, the
contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or
subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.
(4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which
the property in the goods is to be transferred.

2
The researcher through this research paper tries to deal with the concept of unpaid seller and
his rights. Section 45 of the Sale of Goods Act deals with the definition of unpaid seller and
there are various sections which talk about the rights of the unpaid seller.

Aim

The aim of this research is to discuss the concept of unpaid seller and the various rights
available to him against the goods as well as against the buyer personally with the help of
pertinent judicial interpretations.

Objectives

To understand the concept of unpaid seller

To know and analyze the rights of the unpaid seller
To distinguish the right of lien and right of stoppage in transit

Scope and Limitations

The researcher has restricted the scope of the research to the legal provisions of the Sale of
goods Act, 1930 only.

Literature Review

Avtar Singh, LAW OF SALE OF GOODS, 7th ed., 2011

The book is exclusive deals with the Sale of Goods Act, 1930. It deals with the law relating to
the sale of goods and hire- purchases in India. It defines the position and liability of a
manufacturer, dealer and seller in relation to a purchaser viz. The Sale of Goods Act, 1939
and the Hire- Purchaser Act, 1972. The relevancy of the Consumer Protection Act, 1986 in
sale of goods are also explained in the book. The book is very informative and authoritative
in respect to the Sale of Goods Act.

S.C. Tripathi, THE SALE OF GOODS ACT, 2nd ed., 2010

The book is very much useful for the important branch of Mercantile Law. It deals with the
formation of the contract, formalities of the contract, subject matter of contract, condition and
warranties, performance of the contract, rights of unpaid seller, unpaid sellers lien, stoppage
in transit, transfer by buyer and seller, suits for breach of the contract etc. with respect to the
Sale of Goods Act.

3
S.K. Kapoor, CONTRACT- II ALONG WITH SALE OF GOODS ACT AND INDIAN
PARTNERSHIP ACT, 13th ed., 2012

The book is a compilation of specific contracts, The Sale of Goods Act, 1930, Indian
Partnership Act, 1932 etc. The concept of unpaid seller and his rights against the goods and
buyer personally have been dealt in a very detailed form. The book deals with all the
pertinent judicial interpretations related to the unpaid seller and his rights.

S.S. Srivastava, LAW OF CONTRACT I & II, 4th ed., 2011

The book comprehensively covers all the laws relating to Law of Contract. It exclusively
deals with all the mercantile laws including Specific Relief Act, Sale of Goods Act,
Partnership Act, Negotiable Instruments Act etc. To explain and analyze the concept of
unpaid seller with help of leading cases, the book is very much useful.

Research Questions

How can one explain the concept of unpaid seller?

What are the various rights of the unpaid seller against goods?
Which rights are available with the unpaid seller against the buyer personally?
Under what circumstances an unpaid seller looses the lien?

Research Methodology

The research methodology used is purely doctrinal method. A large number of books written
by several authors, articles and internet sources are used to conduct the research since the
topic demands an in depth study of the concept unpaid seller and his rights against goods and
against buyer. Tools taken in the project preparation have been secondary. The only primary
source which has been referred is the bare Act.

Understanding the Meaning of an Unpaid Seller

The term unpaid seller may be defined as the seller to whom the full price of the goods sold
has not been paid. Section 454 of the Sale of Goods Act, 1930 explains the concept of unpaid

seller. The definition emphasizes following characteristics of an unpaid seller:

4
Unpaid seller defined.-- (1) The seller of goods is deemed to be an "unpaid seller" within the meaning of this
Act.- (a) when the whole of the price has not been paid or tendered; (b) when a bill of exchange or other

4
1. He must sell goods on cash terms and not on credit, and he must be unpaid.

2. He must be unpaid either wholly or partly. Even if only a portion of the price, however
small, remains unpaid, he is deemed to be an unpaid seller. Where the price is paid through a
bill of exchange or other negotiable instrument, the same must be dishonored.

3. He must not refuse to accept payment when tendered. If the price has been tendered by the
buyer but the seller wrongfully refuses to take the same, he ceases to be an unpaid seller.

There are several features of the unpaid seller like he must sell goods on the cash basis and
must be unpaid, if he sells on credit basis, he is not an unpaid seller during the period of
credit, the term of credit has expired and the price has not been paid to him, he must be
unpaid wholly or partially i.e. if a part of price remains unpaid, he is unpaid, when the price is
paid in the form of negotiable instruments and it has been dishonored.

For e.g., Party A sells a car on cash basis to party B and the price has not been received yet,
A sells good to B on 5 months credit period and B turns insolvent after 2 months, A sells TV
set to B on the same day cheque basis, the cheque is dishonored due to insufficient funds. A
is an unpaid seller.

There are some conditions in which seller will not term as an unpaid seller. If buyer offers
payment and seller refuses to accept, the seller is not an unpaid seller.

In Laxmilal v. Paras Ram5, a contract for sale of goods, on failure of purchaser to pay money,
the purchaser executed promissory note to secure such money, the seller sued the purchaser
on the said basis. The maintainability of the suit was challenged on the ground that the seller
had no money lending license. It was held that sale transaction on credit basis cannot be
treated to be loan. The Rajasthan High Court observed that the loan is money advanced on
interest over which the interest may be charged in cash or kind. Even if this definition is
extended, then also it cannot be said that the sale transaction on credit basis can be treated to
be loan advanced to the purchaser of the goods during the course of the business engaged in
the trade.6

negotiable instrument has been received as conditional payment, and the condition on which it was received has
not been fulfilled by reason of the dishonour of the instrument or otherwise. (2) In this Chapter, the term "seller"
includes any person who is in the position of a seller, as, for instance, an agent of the seller to whom the bill of
lading has been endorsed, or a consignor or agent who has himself paid, or is directly responsible for, the price.
5
AIR 2006 Raj 302
6
Ibid

5
Section 45 (2), which has been mentioned earlier, provides extensive definition of an unpaid
seller in which rights of an unpaid seller would be similar to those of the ordinary seller.
Thus, the agent of the seller whose name is endorsed in the bill of lading or such an agent or
consignor who himself paid the price or who is directly responsible for the payment are in a
position of the seller.

M/s. Mewar Textiles Mills v. M/s. Sitaram Basanti Lal Jain7, for Mewar Textiles Mills a
separate wagon was supplied by B and instead of mill the price of coal was paid to mines.
The mills refused to take coal supplied to them. Because, the delivery of the goods has not
been taken, therefore, the railway officials charged demurrage and retained the goods. B
filed the petition for the recovery of price and he argued that the price of coal was paid
instead of the mill. It was held that the case was maintainable and it cannot be said that B is
a seller under the Sale of Goods Act under section 45. So, for compensation the petition can
be filed against the mill.

The protections afforded by the Act to an unpaid seller are extended to any person who is in
the position of a seller, as, for instance, an agent of the seller to whom the bill of lading has
been endorsed8, or a consignor or agent9 who has himself paid, or is directly responsible for,
the price.

Rights of Unpaid Seller: An Analysis

Section 4610 of the Sale of Goods Act, 1930 talks about the unpaid sellers rights. Rights of
unpaid seller are basically divided into two parts:
1. Against the goods
2. Against the buyer personally
Rights of unpaid seller against the goods are further divided into two parts:

7
AIR 1982 Raj 215
8
Ramendra Nath Roy v. Brajendra Nath Das, ILR (1919) 46 Cal 831
9
Hiralal Chimanlal v. Pehladrai & Co, AIR 1929 Bom 260; Ireland v. Livingston, (1872) 5 HL 395, 408
10
Unpaid sellers rights.
(1) Subject to the provisions of this Act and of any law for the time being in force, notwithstanding that the
property in the goods may have passed to the buyer, the unpaid seller of goods, as such, has by implication of
law
(a) a lien on the goods for the price while he is in possession of them;
(b) in case of the insolvency of the buyer a right of stopping the goods in transit after he has parted with the
possession of them;
(c) a right of re-sale as limited by this Act.
(2) Where the property in goods has not passed to the buyer, the unpaid seller has, in addition to his other
remedies, a right of withholding delivery similar to and co-extensive with his rights of lien and stoppage in
transit where the property has passed to the buyer.

6
1. Where the property in goods has transferred to the buyer
2. Where the property in goods has not passed to the buyer

The Sale of Goods Act, 1930 provides three kinds of rights to the unpaid seller against the
goods where the property in goods has transferred to the buyer.
1. Right of Lien
2. Right of stoppage in goods in transit
3. Right to resale
The Sale of Goods Act, 1930 provides one right to the unpaid seller against the goods where
the property in goods has not transferred to the buyer.
1. Right of withholding delivery.
According to Bayley, J.11The buyer has no right to have possession of the goods till he
pays the price. The sellers right in respect of the price is not a mere lien which he will forfeit
if he parts with the possession, but grows out of his original ownership and dominion, and
payment or a tender of the price is a condition precedent on the buyers part and until he
makes such payment or tender, he has no right to the possession.
The Sale of Goods Act, 1930 provides three kinds of rights to the unpaid seller against the
buyer personally.
1. Suit for price
2. Suit for damages for non acceptance
3. Repudiation of contract before due dates
4. Suit for interest
So, these are some of the rights of the unpaid seller in various instances mentioned in the Sale
of Goods Act, 1930. All these rights will be discussed in a very detailed form in this chapter.
So, first of all, researcher would like to deal with all these rights which exist against the
goods.

Unpaid Sellers Rights against the Goods

The first right of the unpaid seller against the goods would be Rights of Lien where the
property in goods has transferred to the buyer. Section 46 (1)(a), 47 12, 4813 and 4914 of the

11
Bloxam v. Sanders, 4 B & C 948.
12
Sellers lien.-
(1) Subject to the provisions of this Act, the unpaid seller of goods who is in possession of them is entitled to
retain possession of them until payment or tender of the price in the following cases, namely :-
(a) Where the goods have been sold without any stipulations as to credit.

7
Sale of Goods Act, 1930 deal with the rights of lien.
Lien is the right to retain possession of goods and refuse to deliver them to the buyer until
the price due in respect of them is paid or tendered. An unpaid seller in possession of goods
sold is entitled to exercise his lien on the goods in the following cases:
(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 even though the period of credit may not have yet
expired.
In the case of buyers insolvency the lien exists even though goods had been sold on credit
and the period of credit has not yet expired. When the goods are sold on credit the
presumption is that the buyer shall keep his credit good. If, therefore, before payment the
buyer becomes insolvent, the seller is entitled to exercise this right and hold the goods as
security for the price. The effect of buyers insolvency is that all stipulations as to credit are
put to an end and the seller has a right to say, I will not deliver the goods until I see that I
shall get my price paid.15
The unpaid sellers lien is a possessory lien, i.e., the lien can be exercised as long as the seller
remains in possession of the goods. He may exercise his right of lien notwithstanding that he
is in possession of the goods as agent or bailee for the buyer.16
Transfer of property in the goods or transfer of documents of title to the goods does not affect
the exercise of this right, provided the goods remain in the actual possession of the seller. In
fact when property has passed to the buyer then only retaining of goods is called technically
lien.
Where the property in goods has not passed to the buyer and the title is still with the seller

(b) Where the goods have been sold on credit, but the term of credit has expired.
(c) Where the buyer becomes insolvent.
(2) The seller may exercise his right of lien notwithstanding that he in possession of the goods as agent or bailee
for the buyer.
13
Part delivery.-
Where an unpaid seller has made part delivery of the goods, he may exercise his right of lien on the remainder,
unless such part delivery has been made under such circumstances as to show an agreement to waive the lien.
14
Termination of lien.-
(1) The unpaid seller of goods losses his lien thereon
(a) When he delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer without
reserving the right of disposal of the goods.
(b) when the buyer or his agent lawfully obtains possession of the goods,
(c) By waiver thereof.
(2) The unpaid seller of goods, having a lien thereon, not lose his lien by reason only that he has obtained a
decree for the price of the goods.
15
Griffiths v. Parry
16
Sec. 47(2) of the Sale of Goods Act, 1930

8
then it is, strictly speaking, anomalous to say that the seller has a lien against his own goods.
The sellers lien when property has not passed to the buyer is termed as a right of
withholding delivery.
Accordingly, Section 46(2) provides:
Where the property in goods has not passed to the buyer, the unpaid seller has, in addition
to his other remedies, a right of withholding delivery similar to and coextensive with his
rights of lien and stoppage in transit where the property has passed to the buyer.
This right of lien can be exercised only for the non-payment of the price and not for any other
charges, e.g., maintenance or custody charges, which the seller may have to incur for storing
the goods in exercise of his lien for the price.
This right of lien extends to the whole of the goods in his possession even though part
payment for those goods has already been made. In other words the buyer is not entitled to
claim delivery of a portion of the goods on payment of a proportionate price.17
Further, where an unpaid seller has made part delivery of the goods, he may exercise his right
of lien on the remainder, unless such part delivery has been made under such circumstances
as to show an agreement to waive the lien.18
Also, the lien can be exercised even though the seller has obtained a decree for the price of
the goods.19
But, when lien is lost? As already observed, lien depends on physical possession of goods.
Once the possession lost, the lien is also lost. Section 49 accordingly provides that the unpaid
seller of goods loses his lien thereon in the following cases:
(a) When he delivers the goods to a carrier or other bailee for the purpose of transmission to
the buyer without reserving the right of disposal of the goods; or
(b) When the buyer or his agent lawfully obtains possession of the goods; or
(c) When the seller expressly or impliedly waives his right of lien. An implied waiver takes
place when the seller grants fresh term of credit or allows the buyer to accept a bill of
exchange payable at a future date or assents to a sub-sale which the buyer may have made.
It may be noted that right of lien, if once lost, will not revive if the buyer redelivers the goods
to the seller for any particular purpose.
Thus, where a refrigerator after being sold was delivered to the buyer and since it was not
functioning properly, the buyer delivered back the same to the seller for repairs; it was held

17
S.K. Kapoor, CONTRACT-II, 13th ed., 2012, p. 245
18
Section 48 of the Sale of Goods Act, 1930
19
Section 49(2) of the Sale of Goods Act, 1930

9
that the seller could not exercise his lien over the refrigerator.20
The second right of the unpaid seller against the goods would be Right of stoppage in goods
in transit where the property in goods has transferred to the buyer. Section 5021, 5122, 5223
deals with the right of stoppage in goods in transit.
The right of stoppage in transit means the right of stopping further transit of the goods while
they are with a carrier for the purpose of transmission to the buyer, resuming possession of
them and retaining possession until payment or tender of the price.
Thus, in a sense this right is an extension of the right of lien because it entitles the seller to
regain possession even when the seller has parted with the possession of the goods.
Section 50 provides the conditions in which this right of stoppage in goods in transit can be
exercised. So, an unpaid seller can exercise this right only when:
(a) The buyer becomes insolvent:
The buyer is said to be insolvent when he has ceased to pay his debts in the ordinary course
of business, or cannot pay his debts as they become due, whether he is declared an insolvent

20
Eduljee v. John Bros.
21
Right of stoppage in transit.-
Subject to the provisions of this Act, when the buyer of goods becomes insolvent, the unpaid seller who has
parted with the possession of the goods has the right of stopping them in transit, that is to say, he may resume
possession of the goods as long as they are in the course of transit, and may retain them until payment or tender
of the price.
22
51. Duration of transit.-
(1) Goods are deemed to be in course of transit from the time when they are delivered to a carrier or other bailee
for the purpose of transmission to the buyer, until the buyer or his agent in that behalf takes delivery of them
from such carrier or other bailee.
(2) If the buyer or his agent in that behalf obtains delivery of the goods before their arrival at the appointed
destination, the transit is at an end.
(3) If, after the arrival of the goods at the appointed destination, the carrier or other bailee acknowledges to the
buyer or his agent that he holds the goods on his behalf and continues in possession of them as bailee for the
buyer or his agent, the transit is at an end and it is immaterial that a further destination for the goods may have
been indicated by the buyer.
(4) If the goods are rejected by the buyer and the carrier or other bailee continues in possession of them, the
transit is not deemed to be at an end, even if the seller has refused to receive them back.
(5) When goods are delivered to a ship chartered by the buyer, it is a question depending on the circumstances
of the particular case, whether they are in the possession of the master as a carrier or as agent of the buyer.
(6) Where the carrier or other bailee wrongfully refuses to delier the goods to the buyer or his agent in that
behalf, the transit is deemed to be at an end.
(7) Where part delivery of the goods has been made to the buyer or his agent in that behalf, the remainder of the
goods may be stopped in transit, unless such part delivery has been given in such circumstances as to show an
agreement to give up possession of the whole of the goods.
23
How stoppage in transit is effected.-
(1) The unpaid seller may exercise his right to stoppage in transit either by taking actual possession of the
goods, or by giving notice of his claim to the carrier or other bailee in whose possession the goods are. Such
notice may be given either to the person in actual possession of the goods or to his principal. In the later case the
notice, to be effectual, shall be given at such time and in such circumstances, that the principal, by the exercise
of reasonable diligence, may communicate is to his servant or agent in time to prevent a delivery to the buyer.
(2) Whether notice of stoppage in transit is given by the seller to the carrier or other bailee in possession of the
goods, he shall re-deliver the goods to, or according to the directions of, the seller. The expenses of such re-
delivery shall be borne by the seller.

10
or not [Sec. 2(8)]; and
(b) The property has passed to the buyer:
If property has not passed to the buyer then this right is termed as the right of withholding
delivery [Sec. 46(2)]; and
(c) The goods are in the course of transit:
This means that goods must be neither with the seller nor with the buyer nor with their agent.
They should be in the custody of a carrier as an independent middleman (i.e., in his own right
as a carrier) e.g., railways and common carriers whose business is to transport goods of
others.
The carrier must not be either sellers agent or buyers agent. Because if he is sellers agent,
the goods are still in the hands of seller in the eye of law and hence there is no transit, and if
he is buyers agent, the buyer gets delivery in the eye of law and hence question of stoppage
does not arise.
Section 51 talks about the duration of transit. Since the right of stoppage in transit can be
exercised only so long as the goods are in the course of transit, it becomes necessary to know
as to when the transit begins and when it comes to an end. When the transit comes to an end
the right of stoppage cannot be exercised.24
According to Section 51, goods are deemed to be in course of transit from the time when they
are delivered to a carrier or other bailee for the purpose of transmission to the buyer, until the
buyer or his agent takes delivery of them.
Thus the transit continues so long as the goods are not delivered to the buyer or his agent, no
matter whether they are lying at the destination with the carrier awaiting transmission or are
in actual transit.
The goods are still deemed to be in transit if they are rejected by the buyer and the carrier or
other bailee continues in possession of them, even if the seller has refused to receive them
back.
The transit is deemed to be at an end and the seller cannot exercise his right of stoppage in
the following cases:
(a) When the buyer or his agent takes delivery after the goods have reached destination.
(b) When the buyer or his agent obtains delivery of the goods before their arrival at the
appointed destination.
(c) When the goods have arrived at their destination and the carrier acknowledges to the

24
Avtar Singh, LAW OF SALE OF GOODS, 7th ed., 2011, p. 191

11
buyer or his agent that he holds the goods on his behalf.
(d) When the goods have arrived at their destination but the buyer instead of taking delivery
requests the carrier to carry the goods to some further destination and the carrier agrees to
take them to the new destination
(e) When the carrier wrongfully refuses to deliver the goods to tie buyer or his agent.
(f) When part delivery of the goods has been made to the buyer with an intention of
delivering the whole of the goods, transit will be at an end for the remainder of the goods also
which are yet in the course of the transit.
Section 52 explains that how right of stoppage is exercised. The unpaid seller may exercise
his right of stoppage in transit either:
(a) By taking actual possession of the goods, or
(b) By giving notice of his claim to the carrier or other bailee in whose possession the goods
are.
Such notice may be given either (a) to the person in actual possession of the goods, or (b) to
his principal. In the latter case, notice must be given well in advance to enable the principal to
communicate with his agent or servant in time, so as to prevent delivery to the buyer.
It is the duty of the carrier, after receiving due notice, not to deliver the goods to the buyer
but to redeliver them to, or according to the directions of the seller.
If by mistake he delivers the goods to the buyer, he can be made liable for conversion. The
expenses of redelivery are to be borne by the seller.
Lien and Stoppage in Transit Distinguished:
The main points of distinction between these two rights of an unpaid seller are as follows:
1. The sellers lien attaches when the buyer is in default, whether he be solvent or insolvent.
The right of stoppage in transit arises only when the buyer is insolvent.
2. Lien is available only when the goods are in actual possession of the seller while right of
stoppage is available when the seller has parted with possession and the goods are in the
custody of an independent carrier.25
3. The right of lien comes to an end once the seller hands over the possession of the goods to
the carrier for the purpose of transmission to the buyer. On the other hand, the right of
stoppage in transit commences after the seller has delivered the goods to a carrier for the
purposes of transmission to the buyer and continues until the buyer has acquired their
possession.

25
S.S. Srivastava, LAW OF CONTRACT I & II, 4th ed., 2011, p. 542

12
4. The right of lien consists in retaining the possession of the goods while the right of
stoppage consists in regaining possession of the goods.

So, the last right of the unpaid seller against the goods would be Right of resale where the
property in goods has transferred to the buyer. Section 5426 exclusively deals with the right of
resale.
The right of resale is a very valuable right given to an unpaid seller. In the absence of this
right, the unpaid sellers other rights against the goods, namely, lien and stoppage in
transit, would not have been of much use because these rights only entitle the unpaid seller
to retain the goods until paid by the buyer. If the buyer continues to remain in default, then
should the seller be expected to retain the goods indefinitely, especially when the goods are
perishable?
Obviously, this cannot be the intention of the law. Section 54, therefore, gives to the unpaid
seller a limited right to resell the goods in the following cases:
(a) Where the goods are of a perishable nature; or
(b) Where such a right is expressly reserved in the contract in case the buyer should make a
default; or
(c) Where the seller has given a notice to the buyer of his intention to resell and the buyer
does not pay or tender the price within a reasonable time.
If on a resale there is a loss to the seller, he can recover it from the defaulting buyer. But if
there is a surplus on the resale, the seller can keep it with him because the buyer cannot be
allowed to take advantage of his own wrong.
If, however, no notice of resale [as required in case (c) above] is given to the buyer, the right
of seller to claim loss and retain surplus, if any, is reversed.
In other words, if the unpaid seller fails to give notice of resale to the buyer, where neither the
26
Sale not generally rescinded by lien or stoppage in transit.-
(1) Subject to the provisions of this section, a contract of sale is not rescinded by the mere exercise by an unpaid
seller of his right of lien or stoppage in transit.
(2) Where the goods are of a perishable nature, or where the unpaid seller who has exercised his right of lien or
stoppage in transit gives notices to the buyer of his intentions to re-sell, the unpaid seller may, if the buyer does
not within a reasonable time pay or tender the price, re-sell the goods within a reasonable time and recover from
the original buyer damages for any loss occasioned by his breach of contract, but the buyer shall not be entitled
to any profit which may occur on the re-sale. If such notices is not given, the unpaid seller shall not be entitled
to recover such damages and the buyer shall be entitled to the profit, if any, on the re-sale.
(3) Where an unpaid seller who has exercised his right of lien or stoppage in transit re-sells the goods, the buyer
acquires a good title thereto as against the original buyer, notwithstanding that no notice of the re-sale has been
given to the original buyer.
(4) Where the seller expressly reserves a right of re-sale in case the buyer should make default, and on, the
buyer making default, re-sells the goods, the original contract of sale is thereby rescinded, but without prejudice
to any claim which the seller may have for damages.

13
goods are of perishable nature nor such a right was expressly reserved, he cannot recover the
loss from the buyer and is under an obligation to hand over the surplus, if any, to the buyer,
arising from the resale.
Thus, it will be seen that giving of notice to the buyer, when so required, is very necessary to
make him liable for the breach of contract.
It is so because such a notice gives an opportunity to the buyer either to pay the price and
have the goods, or, if he cannot pay, to supervise the sale to see that the same is properly
made.
It is important that absence of notice, when so required, affects the rights of the unpaid seller
himself only as discussed above and it does not affect the title of the subsequent buyer who
will acquire a good title to the goods.
Section 54(3) specially declares- Where an unpaid seller who has exercised his right of lien
or stoppage in transit resells the goods, the buyer acquires a good title thereto as against the
original buyer, notwithstanding that no notice of the resale has been given to the original
buyer.
Also, the Sale of Goods Act, 1930 provides right to the unpaid seller against the goods where
the property in goods has not transferred to the buyer.
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.

Unpaid Sellers Rights against Buyer Personally

The first right that unpaid seller has against the buyer would be suit for price. Section 5527 of
the Sale of Goods Act, 1930 explains the suit for price. Where property in goods has passed
to the buyer; or where the sale price is payable on a day certain, although the property in
goods has not passed; and the buyer wrongfully neglects or refuses to pay the price according
to the terms of the contract, the seller is entitled to sue the buyer for price, irrespective of the
delivery of goods. Where the goods have not been delivered, the seller would file a suit for

27
Suit for price.-
(1) 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 for the goods according to the terms of the contract, the seller may sue him for the
price of the goods.
(2) Where under a contract of sale the price is payable on a day certain irrespective of delivery and the buyer
wrongfully neglects or refuses to pay such price, the seller may sue him for the price although the property in
the goods has not passed and the goods have not been appropriated to the contract.

14
price normally when the goods have been manufactured to some special order and thus are
unsaleable otherwise.
2. Suit for damages for non-acceptance28-- Where the buyer wrongfully neglects or refuses to
accept and pay for the goods, the seller may sue him for damages for non-acceptance. The
sellers remedy in this case is a suit for damages rather than an action for the full price of the
goods.
The damages are calculated in accordance with the rules con-tained in Section 73 of the
Indian Contract Act, that is, the measure of damages is the estimated loss arising directly and
naturally from the buyers breach of contract. Where the goods have a ready market the
principle applicable is that the seller may recover from the buyer damages equal to the
difference between the contract price and the market price on the data of the breach of the
contract. Thus, if the difference between the contract price and market price is nil, the seller
can get only nominal damages.29 But where the goods do not have any ready market, the
measure of damages will depend upon the facts of each case.
For example, in Thompson Ltd. v. Robinson30, the damages were assessed on the basis of
profits lost. In that case, T Ltd., who were car dealers, contracted to supply a motorcar to R.R
refused to accept delivery. It was found as a fact that the supply of cars exceeded the demand
at the time of breach and hence in a sense there was no market price on the date of breach.
Held, T Ltd., were entitled to damages for the loss of their bargain viz., the profit they would
have made, as they had sold one car less than they otherwise would have sold. To take
another illustration, if the goods have been manufactured to some special order and they are
unsaleable and have been manufactured to some special order and they are unsaleable and
have no value at all for other buyers, then the seller may even be allowed the full price of the
goods as damages.
1. Suit for special damages and interest31-- This Section entitles the seller to sue the buyer for

28
Damages for non-acceptance.-
Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may sue him for
damages for non-acceptance.
29
Charter v. Sullivan, [1957] 2 QB 117
30
[1955] Ch 177
31
Interest by way of damages and special damages.-
(1) Nothing in this Act shall affect the right of the seller or the buyer to recover interest or special damages in
any case whereby law interest or special damages may be recoverable, or to recover the money paid where the
consideration for the payment of it has failed.
(2) In the absence of a contract to the contrary, the Court may award interest at such rate a it think fit one the
amount of the price-
(a) to the seller in a suit by him for the amount of the price.- from the date of the tender of the goods or from the
date on which the price was payable.

15
special damages also for such loss which the parties knew, when they made the contract, to
be likely to result from the breach of it. In fact the Section is only declaratory of the
principle regarding special damages laid down in Section 73 of the Indian Contract Act.
The Section also recognizes unpaid sellers right to get interest at a reasonable rate on the
total unpaid price of the goods sold, from the time it was due until it is actually paid.32
(a) Suit for Damages for Non-delivery33-- Where the seller wrongfully neglects or refuses to
deliver the goods to the buyer, the buyer may sue the seller for damages for non-delivery.
(b) Suit for Specific Performance34-- In any suit for breach of contract to deliver specific or
ascertained goods, the court may direct that the contract shall be performed specifically.
(c) Suit for Breach of Warranty35-- Where there is a breach of warranty by the seller, or
where the buyer elects or is compelled to treat any breach of a condition on the part of the
seller as a breach of warranty, the buyer is not by reason only of such breach of warranty
entitled to reject the goods, but he may
(i) Set up against the seller the breach of warranty in diminution or extinction of the price; or
(ii) Sue the seller for damages for breach of warranty.
Note: The fact that a buyer has set up a breach of warranty in diminution or extinction of the
price does not prevent him from suing for the same breach of warranty if he suffered further
damage.36
Example: X sold a second hand Radio to Y who spent Rs 100 on the repair of this Radio.
This Radio was seized by the police as it was a stolen one. Y filed a suit against X for
recovery of damages for breach of warranty of quite possession including the cost of repairs.

(b) to the buyer in a suit by him for the refund of the price in a case of a breach of the contract on the part of the
seller- from the date on which the payment was made.
32
Telu Ram Jain v. Aggarwal & Sons, AIR 1991 P H 140.
33
Damages for non-delivery.-
Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may sue the seller
for damages for non-delivery.
34
Specific performance.-
Subject to the provisions of Chapter II of the Specific Relief Act, 1877, in any suit for breach of contract to
deliver specific or ascertained goods, the Court may, if it thinks fit, one the application of the plaintiff, by its
decree direct that the contract shall be performed specifically, without giving the defendant the option of
retaining the goods on payment of damages. The decree may be unconditional, or upon such terms and
conditions as to damages, payment of the price or otherwise, as the Court may deem just, and the application of
the plaintiff may be made at any time before the decree.
35
Remedy for breach of warranty
(1) Where there is a breach of warranty by the seller, or where the buyer elects or is compelled to treat any
breach of a condition on the part of the seller as a breach of warranty, the buyer is not by reason only of such
breach of warranty entitled to reject the goods; but he may-
(a) Set up against the seller the Brach of warranty in diminution or extinction of the price; or
(b) Sue the seller for damages for breach of warranty.
(2) The fact that a buyer has set up a breach of warranty in diminution or extinction of the price does not prevent
him from suing for the same breach of warranty if he has suffered further damage.
36
Ibid

16
It was held that Y was entitled to recover the same.37
(d) Right to Treat the Contract as Rescinded or Operative in Case of Repudiation of Contract
by Seller before due Date38 -- Where seller repudiates the contract before the date of delivery,
the buyer may either treat the contract as subsisting and wait till the date of delivery, or he
may treat the contract as rescinded and sue for damages for the breach.
(e) Suit for Interest39--In case of breach of the contract on the part of the seller, the buyer may
sue the seller for interest from the date on which the payment was made.

Conclusion

After the research, the researcher would like to conclude that to study the Sale of Goods Act,
1930, it should be understood in five different parts i.e. formation of a contract, performance
of contract, suit for breach of contract, effects of the contract and unpaid seller. It can be
deducted that unpaid seller is defined as the seller to whom the full price of the goods sold
has not been paid. The legal definition of unpaid seller has explained in section 45 of the Sale
of Goods Act, 1930. So, he is provided with various rights against the goods sold and against
the buyer personally. Rights against the goods are given to him under two circumstances,
first, where the ownership of the goods has transferred to the buyer and second, where the
ownership of the goods has not transferred to the buyer. There are various judicial
interpretations in which the concept of unpaid seller has been explained. Also, there are
various leading case laws which explain the conditions that in which situation unpaid seller
can exercise his rights or under which situations he cannot.

37
Mason v. Burmingham
38
Repudiation of contract before due date.-
Where either party to a contract of sale repudiates the contract before the date of delivery, the other may either
treat the contracts as subsisting and wait till the date of delivery, or he may treat the contract as rescinded and
use for damages for the breach.
39
Interest by way of damages and special damages.-
(1) Nothing in this Act shall affect the right of the seller or the buyer to recover interest or special damages in
any case whereby law interest or special damages may be recoverable, or to recover the money paid where the
consideration for the payment of it has failed.
(2) In the absence of a contract to the contrary, the Court may award interest at such rate a it think fit one the
amount of the price-
(a) to the seller in a suit by him for the amount of the price.- from the date of the tender of the goods or from the
date on which the price was payable.
(b) to the buyer in a suit by him for the refund of the price in a case of a breach of the contract on the part of the
seller- from the date on which the payment was made.

17