SALES OF GOODS ACT

Define an Unpaid Seller. Discuss the Rights of an Unpaid Seller?

ANSWER

UNPAID SELLER

According to Section 45(1) of Sale of Goods Act, the seller of the goods is deemed to be unpaid
seller:
a) When the whole of price has not been paid or tendered or
b) Where a bells of exchange or other negotiable instrument has been received a conditional
payment and the same has been dishonored.

“Here the term seller includes any person who is in the position of a seller e.g. an agent of a seller.”

Rights of unpaid seller

Rights against Goods Rights against Buyer

Lien Suit for Price
Stoppage in Transit Suit for Interest
Re-Sale Suit for Special
Damages
Suit for Damages
for non-
acceptance

An unpaid seller has the following rights against the goods.

(A) RIGHTS OF UNPAID SELLER AGAINST GOODS
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1) RIGHT OF LIEN:-
The unpaid seller of goods who is in the possession of them is entitled to refuse to deliver
the goods to the buyer until the payment or tender of the price in the following cases:
a. Where the goods have been sold. On cash
b. Where the goods have been sold on credit but the terms of credit has expired.
c. if buyer becomes insolvent.
The unpaid seller has losses his lien on the goods when,
a. He deliverd the goods to carrier.
b. The buyer or his agent lawfully obtains possession of the goods.
c. The unpaid seller waives his right of lien.

2) RIGHT OF STOPPAGE:-
The unpaid seller who have the possession of the goods has the right of stopping them in transit
i.e., he may regain possession of the goods and retain them until payment or tender of the price if:
a. The goods are in transit.
b. The buyer becomes insolvent
c. Where the seller has the right of stopping the goods

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The transit and the right of stoppage of goods in transit come to end when:
a. The buyer or his agent takes delivery of the goods.
b. The buyer or his agent takes delivery of the goods before their arrival at the appointed
destination.
c. The buyer or his agent requests the carrier to carry the goods to a new destination.
d. The carrier wrongfully refuses to deliver the goods to the buyer or his agent.
e. Part delivery of goods has been made to the buyer with the intention to deliver whole of
goods.
3) RIGHT OF RESALE:-
An unpaid seller has a right to resell the goods in the following cases.

a. Where the goods are of perishable nature.

b. Where he gives a notice to the buyer and the buyer still fails to make payment within
a reasonable time.
c. Where there is an express provision regarding such right in the contract of sale.

(B) RIGHT OF UNPAID SELLER AGAINST BUYER

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In addition to his right against the goods an unpaid seller has the following rights against the
person of buyer.

1) SUIT FOR PRICE:-

Where the ownership in goods have passed to the buyer and he fails to pay the price according to
the terms of the contract, the unpaid seller may sue him for the recovery of price, irrespect of
delivery of goods.

2) SUIT FOR DAMAGES FOR NON ACCEPTANCE:-

Where the buyer wrongfully refuses to accept and pay for the goods, the seller may sue hi for
damages for non-acceptance.

3) SUIT FOR INTEREST:-

The unpaid seller can recover from the buyer, interest at a reasonable rate on the unpaid price,
from the time it was due till the time it is actually paid.

4) SUIT FOR SPECIAL DAMAGES:-

The unpaid seller can suit the buyer for special damages, if the buyer was informed of such loss at
the time when the contract was made.

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