2. 0 RIGHTS OF UNPAID SELLER AGAINST THE GOODS The operation of the seller’s right over the goods in the Act is dependent upon the being ‘unpaid’. Section 45, 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 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.

A seller for the purpose section 45 includes an agent of the seller, for example, an agent of the seller to whom the bill of lading is endorsed, a consignor, an agent who has himself paid, or an agent who is directly responsible for the price, define under section 45(2), 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 indorsed, or a consignor or agent who has himself paid, or is directly responsible for, the price. The normal remedy of an unpaid seller is to sue the buyer for the price or for damages for non-acceptance.

According to section 55(1) Sale of Goods Act 1957, 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. Section 55(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.

Section 56, says that 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 Sales of Goods Act gives him additional remedies in respect of the goods themselves, thereby conferring on the seller a greater degree of security than is normally available. These remedies against the goods arise where the unpaid seller is possessed of three rights ‘by implication of law’ under section 46(1), which subject to his 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 lawaspect. The rights of an unpaid seller against the good are: i. A lien on the goods for the price while he is in possession of them: Section 46(1)(a), Sale of Goods Act 1957; ii. In the event of insolvency of the buyer, the right of stopping the goods in transit after he has parted with the possession of them: Section 46(1)(b), Sale of Goods Act 1957; iii.

A right of resale: Section 46(1)(c), Sale of Goods Act 1957 iv. A right of withholding delivery: Section 46(2), Sale of Goods Act 1957 Right of lien In respect of the sale of goods, the unpaid seller of goods who is in possession of them is entitled to retain possession until payment or tender of the price. Section 46(2) states that the seller may withhold delivery in addition to his other remedies where property in goods has not passed to the buyer. However, where property in the goods has passed to the buyer, the right of lien over the goods does not exist anymore.

These rights arise in the following cases listed in Section 47(1). Subject to 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 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. Section 47(2) defines that the seller may exercise his right of lien notwithstanding that he is in possession of the goods as agent or bailee for the buyer.

Other than that, section 48 states that 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. Section 49(1) provides that the unpaid seller of goods loses 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.

A seller “S” sells a computer to “B” and delivers it to “B” and since the computer was not functioning properly, “B” delivered it back to “S” for the repairs. It was held that “S” cannot exercise his right of lien over TV set. Right of Stoppage in Transit By section 50, when the buyer of goods becomes insolvent, an unpaid seller who has parted with the possession of the goods has the right of stopping them in transit. This means that the seller 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.

This right to resume possession is commonly called the ‘right of stoppage transitu’. This is distinct from the case where the buyer becomes insolvent while the goods are still in the seller’s control, in which case, the seller may retain possession by virtue of his right of lien until the price is paid. Unpaid seller can stop the goods in transit in the following cases: i. While the buyer becomes insolvent ii. While the goods are out of actual possession of seller, but have not reached buyer’s possession that is goods are in transit with career. ii. The unpaid seller can stop the goods in transit only for payment of the price of the goods and not for any other charges. The cases can be illustrated in such a way that when “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. The right of stoppage applies only in the event of solvency of the buyer while the goods are in control of a carrier. Section 2 defines that a person s said to be insolvent ‘who has ceased to pay his debts in the ordinary course of business, or cannot pay his debts as they become due, whether he has committed an act of bankruptcy or not. ’ At the same time, the unpaid seller cannot stop goods in transit in following cases: i. When the goods reaches the destination. ii. While the buyer or his agent takes possession of delivery even if it is not reached destination. iii. In case the carrier is agent of the buyer, the transit comes to an end the instance carrier receives the goods and seller cannot stop the transition iv.

Carrier’s wrongful refusal to deliver goods to the buyer. In the case Re Phoenix Bessemer Steel Co. (1876), … …………………………….. The purpose of stoppage is to place the seller, by resuming his lien, in priority in regard to good over the general creditors of an insolvent buyer. If stoppage in transit has been affected, and at the same time it is found that the buyer is not insolvent, the buyer is entitled to delivery of the goods and to receive an indemnity from the seller for any loss caused by the stoppage.

Duration of transit Section 51 assumes that the carrier is independent of both seller and buyer. This section sets out rules on the duration of transit for the purpose of the unpaid seller’s right of stoppage. By section 51, (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 the 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 deliver 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. Transit is at the end in the following circumstances: i. The buyer or his agent in that behalf takes delivery of the goods from the carrier or other bailee. [s. 51(1)] ii.

The buyer or his agent in that behalf obtains delivery of the goods before their arrival at the appointed destination. [s. 51(2)] iii. 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 goods on his behalf, and continues in possession of them as bailee for the buyer or his agent. It is immaterial that a further destination for the goods may have been indicated by the buyer [s. 1(3)]. Transit cannot recommence merely because the buyer has instructed that the goods be sent on a further journey to another destination. iv. Where the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent. [s. 51(6)] 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 [s. 51(4)]. Where part elivery of the goods has been made to the buyer or his agent, 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 [s. 51(7)]. How Stoppage in Transit is affected Section 52 provides the method for effecting stoppage which is defined as (1) The unpaid seller may exercise his right of 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 latter 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 it to his servant or agent in time to prevent a delivery to the buyer. (2) When notice of stoppage in transit is given by the seller to the carrier or other bailee in possession of the goods, he shall redeliver the goods to or according to the directions of the seller.

The expenses of such redelivery shall be borne by the seller. In other words, when the seller gives notice of stoppage in transit to the carrier or the bailee who is in possession of the goods, the carrier or bailee shall deliver the goods to or according to the directions of the seller. The expense of such delivery would be borne by the seller. If the carrier delivers the goods to the buyer after a valid notice of stoppage in transit, he is considered to be liable in conversion even though he may have made a mistake.

The seller’s right of stoppage in transit is subject to the particular lien of the carrier for any unpaid freight, and this lien has priority over the seller’s right of stoppage. The seller regains possession of the goods and his lien as unpaid seller by exercising his right of stoppage. This is stated in section 54(1) Subject to 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. As a result, he is restored to his position before the goods were delivered to the carrier for transmission to the buyer, and with additional rights granted under ection 54(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 notice to the buyer of his intention to resell, the unpaid seller may, if the buyer does not within a reasonable time pay or tender the price, resell 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 resale.

If such notice 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 resale. In other words, seller is granted to resell the goods and recover from buyer damages for any loss occasioned by his breach of contract. ——————————————– 1 ]. Sale of Goods Act 1957 [ 2 ]. Section 45(1), Sale of Goods Act 1957 [ 3 ]. Section 47(1), Sale of Goods Act 1957 [ 4 ]. Section 47(2), Sale of Goods Act 1957 [ 5 ]. Section 48, Sale of Goods Act 1957 [ 6 ]. Section 49(1), Sale of Goods Act 1957 [ 7 ]. Section 50, Sale of Goods Act 1957 [ 8 ]. Section 52(2), Sale of Goods Act 1957