f66f7rights of Unpaid Seller

8/8/2019 f66f7rights of Unpaid Seller

1/20

11

MODULEMODULE -- 33

RIGHTS OF UNPAID SELLERRIGHTS OF UNPAID SELLER


2/20

22

INTRODUCTIONINTRODUCTION

The seller & the buyer are bound toThe seller & the buyer are bound to

perform certain duties.perform certain duties.

Broadly speaking, the sellers duty is toBroadly speaking, the sellers duty is todeliver the goods & the buyers duty is todeliver the goods & the buyers duty is to

accept & to pay for them, in accordanceaccept & to pay for them, in accordance

with the contract.with the contract.

If either party doesnt perform his duty inIf either party doesnt perform his duty in

proper way he can be made liable.proper way he can be made liable.


3/20

33

In case the buyer doesnt accept the payIn case the buyer doesnt accept the payfor the goods an unpaid seller, apart fromfor the goods an unpaid seller, apart fromhaving a right to avoid the contract orhaving a right to avoid the contract or

having a right to sue the buyer for thehaving a right to sue the buyer for thebreach of contract, can exercise thebreach of contract, can exercise thefollowing rights against the goods:following rights against the goods:

1.1. LienLien2.2. Stoppage in transitStoppage in transit

3.3. ReRe--salesale


4/20


5/20

55

A seller is an unpaid one when the whole ofA seller is an unpaid one when the whole ofthe price hasnt been paid to him.the price hasnt been paid to him.

It means that when the whole of the price hasIt means that when the whole of the price hasbeen paid (& not the whole of it) the seller is anbeen paid (& not the whole of it) the seller is anunpaid seller.unpaid seller.

A person is an unpaid seller to whom neitherA person is an unpaid seller to whom neitherthe whole of the price has been paid nor thethe whole of the price has been paid nor thesame has been tendered.same has been tendered.

If the price has been tendered by the buyer butIf the price has been tendered by the buyer butthe seller has wrongfully refused to take thethe seller has wrongfully refused to take thesame he is not an unpaid seller.same he is not an unpaid seller.


6/20

66

UNPAID SELLERS RIGHT (S.46)UNPAID SELLERS RIGHT (S.46)

Notwithstanding that the property in the goodsNotwithstanding that the property in the goodsmay have passed to the buyer, the unpaidmay have passed to the buyer, the unpaidseller can exercise the foll. rights against theseller can exercise the foll. rights against the

goodsgoods--1.1. AA lienlien on the goods for the price while he ison the goods for the price while he is

possession of them (Ss.47possession of them (Ss.47--49).49).

2.2. A right ofA right of stopping the goods in transitstopping the goods in transit, while, while

the goods are in transit & the buyer hasthe goods are in transit & the buyer hasbecome insolvent (Ss.50become insolvent (Ss.50--52).52).

3.3. A right ofA right of rere--salesale of the goods (S.54).of the goods (S.54).


7/20

77

1.LIEN1.LIEN

The right of lien is one of the rights againstThe right of lien is one of the rights againstthe goods which the unpaid seller canthe goods which the unpaid seller canexercise.exercise.

Lien means retaining the goods or refusingLien means retaining the goods or refusingto deliver them until the price in respect ofto deliver them until the price in respect ofthem has been paid by the buyer.them has been paid by the buyer.

By a mere exercise of this right, theBy a mere exercise of this right, thecontract of sale of goods is notcontract of sale of goods is notautomatically rescinded [S.54(1)].automatically rescinded [S.54(1)].


8/20

88

1.CONTRACT BETWEEN1.CONTRACT BETWEEN

PARTIESPARTIES Acc. to S.47, this right can be exercised in theAcc. to S.47, this right can be exercised in the

following situations:following situations:

1.1. When the goods have been sold without anyWhen the goods have been sold without anystipulation as to credit i.e. the sale of the goodsstipulation as to credit i.e. the sale of the goodshas been on cash basis.has been on cash basis.

2.2. When the goods have been sold on credit theWhen the goods have been sold on credit theseller can exercise the right of lien on theseller can exercise the right of lien on theexpiry of the period of credit.expiry of the period of credit.

3.3. The seller can also exercise the right of lienThe seller can also exercise the right of lienwhen, before the delivery of the goods to him,when, before the delivery of the goods to him,the buyer becomes insolvent.the buyer becomes insolvent.


9/20


10/20

1010

2.STOPPAGE IN TRANSIT2.STOPPAGE IN TRANSIT

It means that when the goods have beenIt means that when the goods have been

already delivered to a carrier for beingalready delivered to a carrier for being

transmitted to the buyer, the carrier at thetransmitted to the buyer, the carrier at the

sellers request is to deliver the goodssellers request is to deliver the goods

back to the seller & not to deliver to theback to the seller & not to deliver to the

buyer even though the buyer might havebuyer even though the buyer might have

got the possession of document of title togot the possession of document of title tothe goods.the goods.


11/20

1111

Therefore, under such a right, the unpaid sellerTherefore, under such a right, the unpaid sellerregains the possession of the goods after theyregains the possession of the goods after theyhad once been delivered to a carrier for thehad once been delivered to a carrier for thepurpose of transmission to the buyer.purpose of transmission to the buyer.

Acc. to S.54(1), the exercise of this right doesntAcc. to S.54(1), the exercise of this right doesntresult in the rescission of the contract.result in the rescission of the contract.

It only means that the seller after getting backIt only means that the seller after getting backthe goods from the carrier has a right to retainthe goods from the carrier has a right to retain

them until the buyer pays for them.them until the buyer pays for them. If the buyer still fails to pay, the unpaid sellerIf the buyer still fails to pay, the unpaid seller

may even resell those goods.may even resell those goods.


12/20

1212

For the purpose of exercise of this rightFor the purpose of exercise of this right

the following conditions are to bethe following conditions are to be

exercised:exercised:

1.1. Seller should be an unpaid seller asSeller should be an unpaid seller as

defined in S.45.defined in S.45.

2.2. The buyer should be insolvent within theThe buyer should be insolvent within the

meaning of S.2(8).meaning of S.2(8).

3.3. The goods should be in transit.The goods should be in transit.


13/20


14/20

1414

The carrier in different capacities areThe carrier in different capacities are--

1.1. The carrier may be the buyers Agent.The carrier may be the buyers Agent.

2.2. The carrier may be the sellers Agent.The carrier may be the sellers Agent.3.3. The carrier may be neither the buyersThe carrier may be neither the buyers

agent nor the sellers agent but may beagent nor the sellers agent but may be

holding the goods as a carrier.holding the goods as a carrier.


15/20

1515

DURATION OF TRANSITDURATION OF TRANSIT

The right of stoppage in transit can beThe right of stoppage in transit can be

exercised so long as the goods are inexercised so long as the goods are in

transit.transit.

Therefore, it is important to know as toTherefore, it is important to know as to

what is the duration of transit, i.e. whenwhat is the duration of transit, i.e. when

the transit begins & when it comes to anthe transit begins & when it comes to an

end.end.

S.51 provides rules regarding the same.S.51 provides rules regarding the same.


16/20

1616

WHEN TRANSIT COMES TO ANWHEN TRANSIT COMES TO AN

ENDEND1.1. When the buyer takes delivery.When the buyer takes delivery.

2.2. When the carrier or the other baileeWhen the carrier or the other bailee

acknowledges to the buyer.acknowledges to the buyer.3.3. When the carrier wrongfully refuses toWhen the carrier wrongfully refuses to

deliver the goods to the buyer.deliver the goods to the buyer.


17/20


18/20

1818

1.1. Where the goods are of perishableWhere the goods are of perishablenature [S.54(2)].nature [S.54(2)].

2.2. Where the unpaid seller who hasWhere the unpaid seller who hasexercised his right of lien or stoppage inexercised his right of lien or stoppage intransit gives notice to the buyer of histransit gives notice to the buyer of hisintention to reintention to re--sell [S.54(2)].sell [S.54(2)].

3.3. Where the seller expressly reserves aWhere the seller expressly reserves aright of reright of re--sale in case the buyer shouldsale in case the buyer shouldmake default [S.54(4)].make default [S.54(4)].


19/20

1919

NOTICE OF RENOTICE OF RE--SALESALE

Before making a reBefore making a re--sale the unpaid sellersale the unpaid seller

is required to give a reasonable notice ofis required to give a reasonable notice of

rere--sale to the buyer.sale to the buyer.

No such notice is required if the goods areNo such notice is required if the goods are

of a perishable nature.of a perishable nature.


20/20

2020

THANKTHANK

YOUYOU

f66f7rights of Unpaid Seller

Documents

Transcript of f66f7rights of Unpaid Seller