HIMACHAL PRADESH NATIONAL LAW UNIVERSITY

Topic: - The Right Of The Seller To Recover The Price In The Light Of Dunlop Vs Groat

Submitted To: - Mrs. Ruchi Gupta Ma’am

(Assistant Professor of Law)

Submitted From: - Yashasvi Sharma

(B.B.A. LLB, 3rd semester)

Enrolment No.: - 1120202148

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Acknowledgement

I would like to express my special thanks of gratitude to my professor Ruchi Gupta

Ma’am who gave me the golden opportunity to do this wonderful project on the topic
the right of the seller to recover the price in the light of dunlop vs groat, which
also helped me in doing a lot of Research and I came to know about so many new
things I am really thankful to them.

Secondly, I would also like to thank my parents and friends who helped me a lot in
finalizing this project within the limited time frame.

I am over helmed in all humbleness and gratefulness to acknowledge my depth to

all those who have helped me to put these ideas, well above the level of simplicity
and into something concrete.

Thanking you,

Yashasvi Sharma

Enrollment No. 1120202148

B.B.A LLB Sem III

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Introduction:

The contract is an inevitable aspect of each single person’s life. We engage in contracts altogether

spheres of our lives, no matter whether we know it or not. for instance, we've phones, and that we

check emails regularly, whereby we are in contract with the phone service and Google. Moreover,

online retailing, banking, visiting restaurants, booking cabs, then on forms the contractual

relationship. Thus, contracts have a pivotal part to play in our daily lives. In India, umbrella

legislation that governs all kinds of the contract is that the Indian Contract Act, 1872. It

describes the contract under its Section 2 (h) as a legally enforceable agreement.

Primarily, an agreement represents the basic principles as follows, consensually i.e., creating and

accepting the obligations via exchanging promises, offer, acceptance, and consideration. Since the

definition of contract has the word enforceable by law, besides, it denotes free consent [1], the

capacity of the parties [2], and therefore the lawful consideration [3]. But, primarily, why can we

need such a law to control contracts since the bulk of contracts involve unexamined legal

relationships? it's not a res Integra question.

Generally, the contracts are Fait accomplice, howbeit the law involves within the event of a dispute

in executing the already agreed terms of the contract. as an example, if a person purchases a book

from a bookstore, he's under an agreement, and therefore the refire the same binds the customer

and the seller. Here, the vendor provides the book to the buyer, and therefore the consumer is

obliged to pay the prescribed price, the consideration is going to be both the book and its price.

Indeed, the Act of 1872 addresses an equivalent as Reciprocal promise. If the acquisition has done

seamlessly, then the law has no cause to involve. But just in case of any malpractices or default in

performing the promised deed, then the law would inherit force.

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Therefore, to make sure ethical approaches and fair practice within the matters of

selling/purchasing of products, The Sale of products Act has passed on 1 July 1930. before that

date, the law governing the sale of products was contained in Chapter VII of the Indian

Contracts Act, 1872. the ocean change within the trade and commerce practices has necessitated

the passage of an Act, which specifically addressed the sale of products. With the enactment of

such an Act, Section 65 of the Sale of products Act repealed Chapter VII (Sections 76 to 123)

of the Indian Contracts Act.

Hence, concerning the contract of sale, the contractual relationship exists between the vendor and

therefore the buyer. Therefore, both the parties to the contract are sure to perform specific duties.

Sense late, a seller is obliged to deliver the sold goods to the customer, and therefore the buyer has

got to accept and buy it. Per contra, if either party fails to perform their duties as per the contract,

he will face legal consequences. Let’s take the vendor, who has been denied from the payment of

the delivered goods, he terms because the unpaid seller, and therefore the Act bestows him with

certain rights.

Unpaid seller:

Who may be a seller?

The Sale of products Act defines ‘Seller’ under Section 2(13) as, an individual who sells or agrees

to sell goods. Thus, not only the one that actually sells the merchandise but even the one that

agrees to sell an equivalent are going to be considered as a seller under the sunshine of this Act.

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Definition of unpaid seller:

Section 45 of the Act defines unpaid seller as a seller,

When the entire of the worth has not been paid or tendered;

When a bill of exchange or other legal document has been received as conditional payment and

therefore the condition on which it had been received has not been fulfilled by reason of the

dishonour of the instrument or otherwise.

Thus, a seller is an unpaid seller when he has neither paid nor benefited by any legal document

reciprocally for the delivered goods, thanks to the buyer’s fallacy. Thus, so as to render a prefer

to such deceived unpaid seller, the Sale of products Act bestows him with two sorts of rights,

Seller’s Remedies Against Buyer

The suits which will be instituted by the vendor against the customer under the Act are often

roughly divided into two types

• Suit for Price.

• Damages for non-acceptance

I. Suit for Price

Section 55

(1) Where under a contract of sale the property within the goods has passed to the customer and

therefore the buyer wrongfully neglects or refuses to buy the products consistent with the terms of

the contract, the vendor may sue him for the worth of the products.

(2) Where under a contract of sale the worth is payable on each day certain regardless of delivery

and therefore the buyer wrongfully neglects or refuses to pay such price, the vendor may sue him

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for the worth although the property within the goods has not passed and therefore the goods haven't

been appropriated to the contract.

From the above section, it is often seen that except as provided by sub-section (2), the vendor can

only sue for the payment when the property has passed to the customer. The passing of the property

depends upon certain conditions, and if these conditions aren't fulfilled, he cannot sue for the

payment under this section. Where goods are sold for a specific amount and therefore the payment

has got to be made partly in cash and partly in a similar way, the default if made in a similar way

entitles the vendor to sue for the rest of the price.

In the case of Colley V. Overseas Exporters[ii] there was a contract for the sale of some

unascertained leather goods to the customer fob Liverpool. during this case, though the vendor

sent the products, yet they might not be placed on board as no definite ship had been named by

the customer. When an action was brought by the customer against the vendor, it had been

held that the vendor wasn't entitled to pay the worth because the goods had not yet moved

into the possession of the customer. within the absence of an agreement concerning the

payment of price on a particular day, regardless of the delivery, the vendor isn't entitled to

sue the customer for payment, but can cause an action for damage.

Where there's a contract purchasable wherein the worth is payable on a particular date, regardless

of delivery and therefore the refire the buyer wrongfully neglects or refuses to pay such price the

vendor may sue for the worth albeit the property has not been passed and the goods haven't been

appropriated to the contract

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Dunlop v Grote

This will be seen in Dunlop v Grote, The plaintiffs declared on a contract by the defendants to

purchase certain iron of the plaintiffs, alleging a promise by the defendants , “that, if the delivery

of the said iron is not required nu the defendants on or before the 30th day of April, 1845, the said

iron the said iron was to be paid by the defendants on the day and year last aforesaid; and averring

that the plaintiffs has always been ready and willing to deliver the said iron in terms of the contract;

that the 30th of April was passed before the commencement of the suit ; but that the defendants

had not paid for the iron : HELD , first, that under the averment of readiness and willingness to

deliver the iron, the plaintiffs were not bound to shew that any specific iron had been

appropriated by them for that purpose ; and ; secondly, that the plaintiffs were entitled to

recover on the above contract full price of the the iron and not merely the damages which they

had sustained by the defendant’s breach of contract.

Rights against the customer, Rights against the products

But it's a prerequisite to be noted that the definition of seller extends to the seller’s agent or

consignor, who is liable for the worth also can exercise the rights of the seller.

Rights of the unpaid seller:

Rights against the products,

Lien: (Section 47-49)

The seller can exercise his Right of lien against the defaulted buyer. Application of this Right

permits the vendor to dam such goods or deny abandoning its possession until the entire or

pendency in payment has been received from the customer. The Act prescribes the circumstances

under which the unpaid seller can exercise these rights are as follows,

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(a) The sale of products is on an accounting i.e., there's no stipulation within the sale contract on

credit – Thus, since the great has not been sold on credits, the vendor may expect the customer to

pay its price reciprocally during delivery. Withal, as per Section 32, if both parties to the contract

consented, the exchange of products and payment shall happen concurrently. the vendor could

exercise his Right of lien when the customer refuses to afford the price. Such a lien may be a

possessory lien i.e., the vendor plays the role of bailee or agent of the customer (Section 47(2)).

Per contra, if the vendor went on to deliver the products to the customer, later he cannot reclaim

the products so as to exercise his Right of lien

(b) the great has been sold on credit, wherein the term period of an equivalent was expired –

When the amount of credit expires, the worth of the products will become due. Hence, though the

vendor had agreed to sell it on credit, subsequently, with its expiration he may refuse to offer up

possession unless and until the payment has been made.

(c) the customer went insolvent – albeit the products were sold on credits, the vendor shall invoke

his Right of lien, when the customer attains insolvency before the credit expiration date and

shipment.

Stoppage in transportation: (Section 50-52)

This Right of stoppage good in transit enables the unpaid seller to regain possession of the products

even when an equivalent had been shifted to the carrier for the aim of transmitting it to the

customer. Thus, it implies that only after repossessing the products, the vendor shall employ his

Right of restraining the products. However, consistent with Section 54(1), it'll not amount to

rescission of the sale of products contact.

To exercise this Right the subsequent conditions should be satisfied, the seller must be an unpaid

seller i.e., partially/wholly unpaid as per Section 45, The buyer became insolvent and must fall

into the ambit of Section 2(8), The goods must be within the course of transportation. As

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mentioned, to exercise this right, the products must be within the hands of the carrier or the other

middle man i.e., within the duration of the transit. Section 51(1) provides that, the products are

considered to be within the course of transmission from the amount when the vendor parted with

the products and handed over it to any middleman to deliver them to the customer. Thus, the transit

continues unless and until the customer or his agent takes the delivery of these goods. It should be

noted that the unpaid seller may additionally resell the products following the non-payment by the

customer

Right to resale: (Section 54)

After exercising the proper of lien or stoppage in transit, the vendor might twiddle my thumbs the

products until the customer pays the sum. But if the customer continues to remain in default, the

unpaid seller may resell those goods.

To exercise this Right the subsequent conditions should be satisfied, it should be perishable

natured goods. Section 54(2) Notice has been given to the customer expressing his intention to

resell those goods; this is often the ramification of the buyer’s payment default. no matter the

served notice, if the customer refuses to pay off the default within an inexpensive time, then the

vendor shall apply this Right to profit himself. Section 54(2) The seller’s right of resale is that the

ramification of the buyer’s non-payment. Hence even when the first contract is cancelled by the

reselling, the vendor may claim damages.

Rights against the customer,

Right to sue for price:

Basically, the customer is obliged to pay the worth of products that are delivered to him as per the

contract. the difficulty arises only the customer neglects or refuses to buy it. Then the unpaid seller

relies on his rights to recover damages or restitution. Besides exercising his right against the

products, an unpaid seller can take legal actions against the customer to recover the good’s price.

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(Section 55(1)) If it's the case where the products were sold on credits until the expiry of such

period no seller can sue the customer for cost recovery.

Further, Section 55(2) provides that if the customer fails to form the payment on the stipulated

date, the vendor is entitled to recover the good’s price, albeit the delivery of an equivalent has not

been done. Indeed, an equivalent was held within the case of Dunlop v. Groat.

Right to sue for interest:

Section 61 of the Act provides that, if an agreement exists between the parties regarding rate of

interest, then the customer is sure to pay it at the time of payment. But if within the absence of

such agreement, the court may award interest reasonable to the worth from the date of tender or

stipulated payment day.

Right to sue for damages:

As mentioned earlier, consistent with Section 55(2), the customer is sure to accept and buy the

products delivered to him. within the default of the payment, the unpaid seller is entitled to sue the

customer for the worth as given under Section 55 of the Act. Withal, Section 56 permits the vendor

to sue the customer for damages within the event of non-acceptance of the products. for instance,

perishable goods will get damage if the customer refuses to simply accept the ordered goods.

Comprehensively, it the suit for recovering compensation for caused damage instead of an action

claim for its price.

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 Conclusion

Apart from the explained rights, the unpaid seller has an additional right to file a suit for

anticipatory breach of contract in the case of mere rejection of contract before the delivery date

for no genuine reason. As per Section 60 of the Act, the seller can sue the buyer for damages,

where the buyer repudiates the contract without prior notice and information.

Therefore, the aforementioned is the brief about the unpaid seller’s rights granted by the Sale of

Goods Act, 1930. Irrespective of the granted rights of the unpaid seller, this Act further bestows

certain rights for the buyer as well. Every contract of sale composes consideration from both the

parties resulting in reciprocal promise, similarly both the parties to the contract have certain rights

to prevent suffering losses.

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Bibliography

https://blog.ipleaders.in/rights-of-an-unpaid-seller/

https://blog.ipleaders.in/unpaid-seller-rights/

https://www.vedantu.com/commerce/rights-of-unpaid-seller-against-buyer

[1] The Indian Contract Act, 1872, S 15-22.

[2] The Indian Contract Act, 1872, S 11 & 12.

[3] The Indian Contract Act, 1872, S 23.

[4] The Indian Contract Act, 1872, S 2(f).

[5] The sale of Goods Act, 1930, S 45(2).

[6] The sale of goods Act, 1930, S 47.

[7] Miles v. Gorton, (1834) 2 C &M 504, at p. 511: 39 R.R. 820.

[8] M/s. Jain Mills and Electrical store v. State of Orissa, A.I.R. 1991 Ori. 117.

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