UNPAID SELLER UNPAID SELLER AND HIS RIGHTS

Priya Khade P1022Charusheela Khandale P1024Kinnar Majithia P1026Saloni Marphatia P1028Arjun Mishra P1030

Who is an Unpaid Seller?Who is an Unpaid Seller?Seller who has not been paid

(either in the whole or partial)

One who has received payment in the form of bill of exchange or other negotiable instrument which has been dishonored

Rights of an Unpaid SellerRights of an Unpaid SellerWhen property of goods passed to

buyer Right of Lien Right of Stoppage in Transit Right of Resale

When property of goods not passed to buyer Right of Withholding Delivery Other Rights

Overview of rights of Unpaid Overview of rights of Unpaid SellerSeller

RIGHT OF LIENRIGHT OF LIEN

Possession is essential to create

right of lien

Lien is of two kinds:

1. General Lien

2. Particular/Specific Lien

Right of Lien of Unpaid Seller –Right of Lien of Unpaid Seller –Sec. 47Sec. 47

• Applicability:

Goods sold without any stipulation as to credit

Goods sold on credit, credit-term expires

Buyer becomes insolvent, seller possesses goods

Sec. 48 - Part Delivery of Sec. 48 - Part Delivery of GoodsGoods

Right of lien applicable to undelivered goods unless agreement to waive lien has been made

“Delivery of the part does not constitute the delivery of the whole”

Sec. 49 – Termination of Sec. 49 – Termination of LienLien1. Seller delivers goods

to carrier/bailee for transmission to buyer without reserving right of disposal of goods.

2. Buyer lawfully obtains possession of goods.

3. Seller waives his right of lien.

Right of Stoppage in Transit-Right of Stoppage in Transit-Section 50Section 50

Essentials Seller must be partially/wholly unpaid Buyer must have become insolvent Goods must be in transit Eg: Seller has parted with possession of

goods and buyer has not received the goods

Section 51Section 51 Duration of TransitDuration of Transit

• Transit ends when: Buyer takes delivery of goods Buyer/his agent takes deliver of

goods before appointed destination i.e. in

anticipation Carrier/bailee at appointed

destination acknowledges possession of goods Carrier/bailee wrongfully refuses to

deliver goods to buyer/his agent

Buyer refuses the goods:Buyer refuses the goods: If buyer refuses goods-transit does NOT come

to an end, even if seller refuses to take them

back. Goods continues to be in possession of bailee

Section 52: How Right of Stoppage in transit Section 52: How Right of Stoppage in transit is is

effected by the seller:effected by the seller: Taking actual possession of goods Giving notice of his claim to carrier/bailee who possesses goods or to redirect goods to seller or according to his directions

Sale generally not rescinded by lien or Sale generally not rescinded by lien or stoppage in transitstoppage in transit

Right of stoppage in transit is lost wheRight of stoppage in transit is lost when:

Buyer/his agent obtains delivery of goods from carrier/bailee After arrival of goods at appointed destination, carrier/bailee acknowledges

to buyer that he holds goods on his

behalf Carrier/bailee wrongfully refuses to

deliver goods to buyer/his agent

Right of Resale of unpaid Right of Resale of unpaid seller -Section 54seller -Section 54

• Unpaid seller can resale his goods after executing his Right of Lien on retaining his goods or after exercising his Right to Stoppage in Transit upon insolvency of the buyer under some circumstances.

Circumstances for Resale:Circumstances for Resale: Where goods are perishable

Where seller gives notice to buyer of his intention to resell and buyer does not pay the price within a reasonable time after the notice

Where seller has expressly reserved his right of resale in case of default

If the seller has given notice to If the seller has given notice to the buyer:the buyer:

He can hold the buyer responsible for loss suffered due to breach of contract.

Profits earned on resale are retained by

the unpaid seller.

If notice has not been given to the If notice has not been given to the buyer:buyer:

Seller cannot recover damages from buyer.

Seller has to pay the profits if any to the buyer.

Seller can claim difference between the contract price and the market price at the date of the breach.

•If property in goods has not passed to buyer, seller has the Right to Withhold Delivery.

Section 25-Reservation of Right of Section 25-Reservation of Right of DisposalDisposal

This is retained by seller when the seller imposes certain conditions and until conditions are fulfilled.

Sec. 55 & 56 – Other Sec. 55 & 56 – Other RightsRights Sue the buyer for price of goods

Seller may sue buyer for damages for wrongfully neglecting/refusing to accept the goods

Recover interest from buyer where there is a specific agreement to that effect. If there is no agreement, seller may charge interest on price when it becomes due.

Effect of Sub-Sale or Pledge Effect of Sub-Sale or Pledge by buyer-Section 53by buyer-Section 53

In case of transfer of goods by buyer, the unpaid seller’s right of lien or stoppage in transit can be exercised subject to rights of transferee. When pledgee sells goods, the unpaid seller is entitled to receive the surplus sale proceeds.

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