Rights of

An UnpaidSeller

LEARNING OBJECTIVES
After going through this chapter,you will be able to:
" Explain an Unpaid Seller
Discuss the Features of an Unpaid Seller
Describe the Rights of an Unpaid Seller: Rights against the goods and Rights against the
buyers personally.
Differentiate between Lien and stoppage in Transit
Explain effects of sub sale or pledge by buyer
" Describe Buyer's remedies against the seller
INTRODUGTION
An unpaid seller is one who has not received the whole of
the price for the goods sold by him. Price of the goods is the An unpaid selleris one who has
consideration in a contract of sale. However, the payment not receivedthe whole ofthe
of the price is immaterial for transferring the ownership ie. priceefor the gopds sold by him.
ownership may change even without the payment of the
price. In this Chapter, the term "seller
for instance, an agent of the seller to includes any person who is in the position of a seller,
or agent who has paid, or is whom the bill of lading has been endorsed, or a consigo
directly
against goods as wellas against the buyerresponsible for the price. An Unpaid seller has the ri
personally.
MEANING OF AN UNPAID SEEP
According to Section 45 of
seller in the following cases:the Sale of Goods Act, the seller of goods is an unpaid
() When whole of the deemed to be
price has not been paid; or
(i) When a bill of
payment and itexchange
or other
negotiable
has been dishonoured. instrument has been
received as
conditional
ac

202
 CH. 19:RIGHTS OF AN UNPAID SELLER 203
FEATURES OF ANUNPAID SELLER
Eollowing are the features of an unpaid seller:
heGoods have been sold on cash and the seller must be
(h The full price has not yet been paid to unpaid.
the
nrice has been paid, the seller becomes seller. Even if the substantially portion of the
a Abill of exchange or other unpaid seller within the meaning of Section 45.
negotiable instrument such as cheque was received as
of the price, but the instrument has been dishonoured payment,
ÀWhere the seller has
obtained a decree tor the price of the goods and the same
been satisfied, he is an unpaid seller. has not
Thus where a major part of the price has been paid
the seller is still deemed as unpaid. However, the and only a small portion remains unpaid.
seller
tendered whole of the price but the seller has refused toceases to be unpaid where the buyer has
accept
credit sales cannot be termed as an unpaid unless the credit it. Similarly, a seller in respect of
not paid the price in full. However, during the credit periodperiod has expired and the buyer has
if the buyer becomes insolvent, the
seller becomes an unpaid seller even before the expiry of the credit
taken into account that it is only non-payment of price that may period. Finally,it should be
If the price has been paid but some other expenses render him as an unpaid seller.
incidental to delivery such as, cartage, loading
and unloading expenses etc., remain unpaid, the seller cannot be
termed as an unpaid seller.
The term 'seller' includes any person who is in the
position of a seller. For example, an agent of
the seller to whom the bill of lading has been endorsed, or a
paid, or is directly responsible for the recovery of price. consignor or agent who has himself
EXAMPLE
'A' purchased a laptop from B's' showroom for 40,000. 'A' paid? 10,000
to pay the balance amount within one month. B' is not an unpaid seller instantly and agreed
during this credit
period. But, B' shall becone an unpaid selle, if A' does not discharge his liability on expiry
of credit period.

RIGHTS OF AN UNPATD SELLER

oubject to the provisions of this Act [Section 46(1)] and of any law for the time being in force,
iotwithstanding that the property in the goods may have passed to the buyer, the unpaid seller
O g00ds, as such, has by implication of law: (a) a lien on the goods for the period while he is in
POSSession of them, (b) in case of the insolvency of the buyer a right of stopping the goods in transit
er ne has parted with the possession of them, (e) aright of re-sale as prescribed by this Act.
haing to Sec,to46(2),
has,,in addition whereremedies,
his other the property
arightin goods has not passed
of withholding to the
delivery buyer,
similar to the
and unpaid seller
co-extensive
with his rights of lien and stoppage in transit where the property has passedto the buyer.
The rights of an unpaid seller may broadly be classified into the followingtwo heads:
() Rights against the goods.
(2) Rights against the buyer
personally.
Rights of Unpaid Seller against the Goods
nnconfers the following rights to an unpaid seller against the goods where the property
goods has passed to the buyer:
 204
PART II:SALEOF GOODS ACT, 1930

() Right of lien (Sections 47-49)

() Right of stoppage of goods in transit (Sections 50-52)
(iü) Right of resale (Section 54)
(iv) Right to withhold delivery [Section 42(2)]
() Rights of Lien:
The termlien' implies retaining the possession of the goods The termlien implies
until the price due in respect of the goods is paid. As per the possessionoftheretainina
goodsunti
Section 47 of the Sale of Goods Act, an unpaid seller of goods the price due in respec ofof the
who is in possession of the goods is entitled to exercise this goods IS paid.
right 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, and the term of credit has expired;
(c) Where the buyer becomes insolvent even though the period of credit may not have ve
expired.
The seller may exercise his right of ien no matter whether
he is in possession of the goods merely as an agent or bailee The seller mayexercise his right
for the buyer. of lien no matter whether he
Lien depends on physical possession. If the physical pos is in possession of the goods
session of goods is lost, the right of lien is also lost. In other merely as an agent or bailee for
words, the unpaid seller can exercise lien so long as he is the buyer.
in actual possession of the goods.
Transfer of ownership or title is immaterial toput into eftedt
the right of lien. It is not affected even
title to the goods such as bill of lading, where the seller has delivered to the buyer documents ot
possession of the seller. However, if thedelivery
buyer
orders etc., provided the goods remain in actual
bona fide buyer, the unpaid seller's right of subsequently transfers the document of title t0a
lien or
In Sale of Goods Act, an
nary cOurse of
stoppage-in-transit
insolvent person is one who has ceased to pay
is defeated (Section 33}
business,
committed an act of
or is unable to pay his
debts when
his debts in the o
they become due, whether he has
lien subsists in the factinsolvency or not [Section 2(8)]. The real test of exercising the right of
retains the title, then it whether the property in goods has
will be incorrect to passed to the sellerstil
buyer. If
Technically this should be termed as 'a statethat the seller has alien against his Own goods the
possession of goods (lien). right of withholding
delivery' and not 'a right toretain
Moreover, the seller can exercise the right of
cannot retain the goods for any lien exclusivelyfor priceHe
borne by him during the other charges, such as non-payment of the
cost,etc,
possession of the goods on maintenance charges,
behalf of the storage
EXAMPLE: buyer.
Xsold a laptop to Y' for?
buyer becomes insolvent 30,000 and allowed him to pay Y,the
possession of the goods forduring the period of credit. X' the price within a month.
relainth
non-payment of the price by being the unpaid Can
Y'. seller
 CH. 19 :RIGHTSOF AN UNPAID SELLER
205

EX
ysells his two-wheeler to 'Y. The price is to be paid within amonth of
the sale. While the
vehicle is still in the possession of "X ;he issues the sale letter in favour of 'Y'and
other documents of title to him. "Y,however, does not pay the price hands over
within the
period. X being an unpaid seller is entitled to refuse to deliver thetwo-wheelerstipulated
nrice is paid. Transfer of documents of title to the goods does not hamper the rightuntil of
the
As amatter of fact, the right of lien 1s linked with the possession of goods lien.
property therein. and not with the

Rules Regarding the Right of Lien

The important legal provisions in connection with the exercise of right of lien are as follows:
() The seller must possess the goods: The goods must be in actual possession of the seller.
In other words, once the possession is lost, the lien is also lost.
(i) Regarding cash sale: Where the goods have been sold without any stipulation as to credit,
the unpaid seller may retain the goods if the buyer fails to pay or tender the whole price
upon delivery.
(i) Regarding credit sale: Where the goods have been sold on credit, the seller may retain
the goods if the buyer fails to pay the whole price after the expiry of credit period. Thus
in case of credit sales, the right of lien cannot be exercised during the period of credit.
(iv) When the buyer becomes insolvent: Where the buyer becomes insolvent, the unpaid seller
can retain the possession of the goods.
(v) In case of part delivery: 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. In simple words,
the right of lien is lost where part delivery is intended as delivery of the whole.
(vi) Subject matter is price: As a matter of fact, the right of lien can only be exercised against
non-paymnent of price and not for any other expenses, such as freight, godown rent, in
terest, etc.
(vii) Where documents of title have already been delivered: In case of documents of title have
been delivered but the goods are in actual possession of the seller, the right of lien can be
exercised.
(vii) The right of lien is absolute: The right of lien being absolute, the unpaid seller is entitled
to refuse to deliver a part of the goods against payment of a proportionate price by the
buyer.
(ix) When the seller po8sesses the goods otherwise: The right of lien can be exercised even if
the unpaid seller is in possession of the goods in any capacity such as a bailee or agent.
(:) Where the seller has obtaineda decree for the price of the goods; The right of lien can be
exercised even though the seller has obtained a decree for the price of the goods.

Valpy vs. Gibson (1847)

Where the seller has repossessed the goods after sale for some purpose eg, repairs or
repacking, he cannot exercise right of lien on these goods.
 206 PART I: SALE OFGOODS ACT, 1930

CASE LAW Termination of Lien (Sec. 49)

The lien depends upon the actual possession of the goods. This means an unpaid seller
tof the price so long as he is in
exercise his right of lien on the goods for non-payment the lien is alsolost.
pOssesson of the goods. The moment possession
is lost actug
The unpaid seller of goods loses his lien in the following cases:
i By delivery of goodsto a carier or other bailee /Sec 49(I)): When the goods are deli
without
to a carrier or other bailee for subsequent transmission to the buyer
the right of disposal of the goods. The reason for the same is that delivery to the resecarrvirniegr
amounts to delivery to the buyer and therefore right of lien is lost. Therefore a
Section 49(1)(a), the unpaid seller losses his lien on the goods when he delivers the
a carrier or other bailee for the purpose of transmission to the buyer without
the right of disposal of goods. reserving
EXAMPLE
* agreed tosell 100 sewing machines to Y for apriceto be paid on delivery, and deliverai
the same to the railways for transmission of the same to the buyer. The railway receipt was ala
taken in the name of Y and sent to him. In such a case, Xcannot exercise the right of ien
ii By delivery to the Buyer or his agent: When the buyer or his agent lawfully obtain pos.
session of the goods [Section 49(1) (b)], However, if the buyer obtain the possession of the
goods by way of wrongful act or for temporary purpose, the right of lien is not defeated.
iii. By Waiver: When the seller waives his right of lien. This
or implied. An express waiver takes place where the
waiver may be either express
contract
terms (oral or written) that the seller shall not be entitled to retain of sale provides in express
goods, even if the price is not paid; whereas an implied waiver the possession of the
of sale implies that the seller will not exercise his occurs when the contract
right
fresh terms of credit or allows the buyer to accept a bill of lien. Thus, where the seller grants
date or agrees to a sub-sale, which the buyer may of exchange payable at a future
have made, there is an implied waiver.
iv. By Tender of price: When the
the right of lien is lost as sellerbuyer tenders the price but the seller refuses to accept 1t,
an end to the lien even ceases to be an unpaid seller. A tender of
the price puis
though seller has refused to accept the money.
v. Document of Title
lawfully issued to the buyer: Where a
he transfers the document of title to goods ne
been lawfully issued to the buyer and
andin good faithdocuments
else who takes them for thereby to someo"
the unpaid seller's right ofconsideration
lien is defeated [Proviso to and the seller has assentedtoit,
However, where the property in goods has not Section 53(1)].
the right of lien does not arise. In passed to the buyer. the question of exercising
such a situation,
the delivery of the goods. the unpaid seller has the to
withhold
(ii) Right of Stoppage of Goods in Transit
right
The right of
of the gOodsstoppage
of goods in transit means the
while they are in transit. It implies stopping
the goods from being delivered to the preventing The Tight of stoppage of goods
possession thereof while in transit and buyer,resuming
until payment or tender of the price. This right retaining them inwhenthegoods
transit can be exercised only
are in he course
when the lien is lost. Infact, the right of arises only of transit
stoppage in transit
 CH. 19:RIGHTS OF AN UNPAID SELLER
207
extension of
right of lien as by exercising this right, the
is an unpaid seller regains possession
Over the goods.
According to provisions of Section 50, of the Act, "when the buyer of the
t the unpaid seller who has parted with the goods becomes insol-
possession of
themin transit, that is to say, he may resume possession of the
the goods has the right of stopping
goods as
Rurse of transit, and may retain them until payment or tender of the price." long as they are in the
The right of stoppage-in-transit can only beexercised in the following cases:
() The seller must be unpaid;
(i) The property in goods must have passed to the buyer;
(it) The buyer of the goods has become insolvent;
(iv) The goods must be in transit ie, goods neither should be in the possession of the seller
nor in the possession of the buyer or his agent;
() The goods-in-transit can bestopped only in case of
non-paymnent of price
In other words, the right of stoppage-in-transit shall be available to an unpaid seller until
or tender of price ie., the moment the price is paid or tendered by the buyer, the sellerpayment
will lose
this right.
Duration of Transit
The right of stopping the goods in transit can be exercised only when the goods are in the course
of transit. Thus, it becomes necessary to know as to how long and up to what time
be said to be in transit. In other words, when does the transit begin and when does it
goods can
come to
n end? In this regard, Section 51 provides the following:
1. Goods are deemed to be in course of transit from the time they are delivered to a carrier
or other bailee for the purpose of transmission to the buyer, until the buyer or his agent
takes deliveryof them from such carrier orother bailee.
2. IF the buyer or his agent obtains delivery of the goods before their arrival at the agreed
destination, the transit comes to an end.
3. If, after the arrival of the goods at the agreed destination, the carrier or other bailee ac
knowledges to the buyer or his agent that he holds the goods on his behalf and continues
in possession of goods as bailee for the buyer or his agent, the transit comes to an end
andit is immaterial that a further destination for the goods may have been indicated by
the buyer.
4. If the buyer and thecarrier rejects the goods 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.
D. When goods are delivered to aship chartered by the buyer, it is aquestion depending on
the circumstances of the particular case, whether they are in the possession ofthemaster
of the ship as a carrier or as agent of the buyer.
0. Where
his
the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or
agent, the transit is deemed tobe at an end.
nere part delivery of the goods has been made to the buyer or his agent, the remainder of the
uods
as to may be stopped in transit, unless such part delivery has been given in such circumstances
sh0w an agreement to give up possession of the whole of the goods.
 ACT, 1930
208 PART II :SALE OF GOODS

Termination of Transit
stoppage in transit in the following manne
1e unpald seller may exercise his right of
in transit either by
ottahkierngbaiactleeu
(1) The unpaid seller may exercise his right to stoppage to the carrier or
possession of the goods, or by giving notice of his claim
may be given either tothe personin
whose possession the goods are. Such noticeIn the
possession of the goods or to his principal.
latter case the notice, to be actua
shall be given at such time and in such circumstances, that the principal, by
agent in time the eexer
f ectdiwske
of reasonable diligence, may communicate it to his servant or to
delivery to the buyer. prevert;
or
(2) Whether notice of stoppagein transit is given by the seller to the carrier bale: other
in possession of the goods, he shall re-deliver the goods to, or according to the direcie
of the seller. The expenses of such re-delivery shall be borne by the seller.
Such notice may begiven either to the person in actual possession of the goods or to his agent .
case the notice is given to the principal, to be effective, it nmust be given at such a time and und
such circumstances, that the principal, by exercise of reasonable diligence, may communicatet
to his servant or agent in time so as to prevent a delivery to the buyer [Section 52(1)|,
When notice of stoppage in transit is given by the seller to the carrier or other bailee in possessiem
of the goods, he shall re-deliver the goods to, or according to the directions of, the seller. The
expenses of such re-deliveryshall be borne by the seller [Section 52(2)].
CASE LÀAW GIP Railway vs. Hanuman Das (1889)
The seller sent the good to the railway company for
arrivedat the destination the railway company delivered transmission to the buyer. When the goods
them in the cart. Before the cart had left the railway the goods to the buyer. The buyer loaded
a telegram to stop the delivery of the compound, the railway company recetved
goods.
the telegram and it was sued by the seller. No action was taken by the railway company on
of goods to the buyer. The railway Held, the transit had terminated on handing ovt
of goods. If the buyer or his agent company, therefore, could not exercise right of stoppag
appointed destination, the obtains the delivery of the goods before their arrival at tie
transit connes to an end.
CASE LAW Lyons vs. Hoffnung (1890)
X' purchased certain goods from Y at Sydney. The
Kimberley. At the time of
shipment goods were to be dispatched byshipto
of goods, the buyer (X)
the purpose of going up to the also took aseatin the sanee shipfor
the buyer became insolvent. Thepointt of destination of goods. Werein transi,
seller When the goods
transit did not
terminate as the buyer exercised his right of lien to stop the transit. Held, the
the delivery of the goods. taking seat in the same
ship did not totaking
amou
Distinction between Lien and
The rights of lien and stoppage-in-transit
stoppage in transit are similar in
boththese rights to retain exercise
possession
passedto the buyer, but the seller
of the goods where One respect ie. the seller can
beel
property in the goods has already
a number of ways. The differences has not yet received price it
differ
between in full. two
lien and However,
the below:
stoppage-in-transit
are given
 CH. 19:RIGHTS OF AN UNPAID SELLER 209

Difference between lien and stoppage in transit

Lien
Stoppagein-transit
NO.
1. Toexercise the right of liem goods must The right of
be in actual possession of the seller. when the
stoppage-in-transit can be exercised
seller has parted with his goods
and the goods are in transit Le. the goods are
neither in the possession of the seller nor in the
possession of the buyer but in possession of an
independent carrier or bailee.
2 This right can be exercised even when This right can be
exercised against non-payment
the buyer is solvent, but refuses to pay of the price but only when the buyer has
the price. become insolvent.
3. Lien comes to an end when the seller The right of
parts with the goods. stoppage-in-transit commences
only when the seller has delivered the goods to
a carrier.
4 This is a right toretain possession over This is a right to regain
the goods. possession of the goods.
5. This right can be exercised by the |This right can be exercised by the seller through
seller himself. the carrier or the bailee in whose possession
the goods are.
Effect of Sub-Sale or Pledge by Buyer
An unpaid seller's right of lien or stoppage in transit is not affected by any sub-sale or other
disposition of the goods which the buyer may have made, unless the seller has given his consent
thereto [Section 53(1)]

A of Delhi sells certain goods to B' of Kolkata and delivers them to railways for onward
transmission to the buyer. Before the goods reach their destination, B' the buyer, becomes
insolvent but in the meanwhile B' transfers the property in the goods to Cwho acquires
the same bona fide for consideration. 'A' can still exercise his right of stoppage in transit. The
Subsequentcontract of salebetween B' and C' willnot hamper his right.

Exceptions:
OWever, there are twoexceptions to this rule ie, when the right of lien and stoppage-in-transit
against the goods) are defeated by a sub-sale, pledge or other disposition of the goods by the
buyer. These exceptions are:
(4) Upon being seller's consent: When the seller has assented to sub-sale or other disposition
of the goods, which the buyer has made, the unpaid seller cannot exercise his right of lien
or stoppage-in-transit.
 210
PART I:SALE OF GOODS ACT, 1930

EXAMEPLE
A' sold to B' S0 kg of rice fronm his godown for an agreed price. Out of which B
10 kg to C. ' acknowledged this sub- sale and told C' that the rice would be
in due course of time. In the meantime B' became insolvent. In such a case,'A'g
against 10 kg is lost for his assent to the title of C, the sub-buyer.
delivefruriegrtdhthertoof sloieln4
hi

(b) Transfer of documents of title: Where the document of title to the goods has
or lawfully transferred to any person as buyer or owner of the goods, and that been is ued
goodpersoaiat
transfers the document of title to another person who takes the document in
and for consideration, then,
() if such last mentioned transfer was by way of sale, the unpaid seller's
or stoppage in transit is defeated, and sright of liex
(i) if such last mentioned transfer was by way of pledge or other disposition
for
the unpaid seller's right of lien or stoppage in transit can only be exercised. value,
to the rights of the transferee.
subject
EXAMPLE
A'sold certain goods to B'for an agreed price. A' delivered the goods to the railways for
transmission to B'and took the railway receipt in the name of B. B'before making the pavme onwned
of the goods to 'A, endorsed the railway receipt to 'C'for
bonafide. In themeantime, B' became insolvent. Here 'A's' consideration who boughtthe poot.
lost and the sub-buyer, C,acquires a good right to stop the goods in transit it
title
Section 53(2) further provides that where the transfer is by
may require the pledgee to have the amount way of a pledge, the unpaid seller
as far as possible, out of any other goods or secured the pledge satisfied in the first instance.
by
and available against the buyer. In securities of the buyer in the hands of the pledgee
the unpaid seller'srights as to lien or other words, in cases of transfer of title by way of
can exercise these rights subject to the stoppage in transit are not pledge,
rights of the pledgee. completely defeated rather he
EXAMPLE
A' of Delhiasked B' of
of 5,000per quintal and Bhubaneswartoto supply hin 100 quintals of Basmati rice at the rae
railways and sent the railway promised pay the price on delivery. B
collateral security for a debt of?receipt (R/R) to A, who in tun delivered the goods o
B's'consideration, A' 50,000 which he owes to C'. pledged the same with
(being document of title)became insovent. In case, B' is entitled Thereafter. before A' could clu
back from C'after this to claim the
paying of him? 50,000 ie., the railway reco
(t#i) Right of Resale amount of the
As per Section 54, a seller
buyer is entitled to resell them who is in possession of the
in the goods that have not been paid for bythe
a. Where the following circumstances:
goods are perishable in
can resell them
after nature: In case of seller
reasonable perishable
the expiry
notice to the original buyer in such a of goods, the
case. time. He does not unpald
servingany
b. Where the
seller expressly reserves a require
a right of re-sale in case the right of resale:
Wherethe seller expressly the reserves
buyer defaults in
payment, the unpaid seller may resell
 CH. 19: RIGHTS OF AN UNPAID SELLER 211

goods when the buyer defaults. In this case the original contract of sale is thereby re-
scinded without prejudice to any claim which the seller may have for damages.
Where the unpaid seller gves notice to buyer of his intention to re-sell: Having exercised
theright of lien or stoppage in transit, the unpaid seller should give notice to the buyer
Fbis intention to resell. If the buyer does not withina reasonable time
pay or tender the
price, the unpaid seller may re-sell the goods. In such a case the unpaid Iseller will also be
entitled recover from the original buyer damages for any loss
to
of contract. However, the buyer shal not be entitled to any profit,occasioned
by his breach
which may
sub-sale. On the other hand, if the unpaid seller does not servea notice to theoccur on the
defaulting
buver of his intention to re-sell, he shall not be entitled to recover such damages, and the
buver shall be entitled to the profit, if any, on the resale [Section 54(2)].
Furthermore, if the unpaid seller fails togive a reasonable notice to the defaulting buyer,
it affects the rights of the unpaid seller only. It does not affect the title of the subsequent
buyer.
(iv) Right to withhold delivery
Where the property in goods has not passed to the buyer, the unpaid seller, in addition to other
rights, has a right to withhold the delivery of goods. This right is similar to and co-extensive with
his rights of lien and stoppage-in-transit, where the property has passed to the buyer [Section
46(2))
RIGHTS AGAINST THE BUYER PERSONALLY
In addition to the rights against the goods, an unpaid seller has certain remedies against the
buyer personally. These rights are as follows:
1. Suit for price (Sec. 55)
2. Suit for damages for non-acceptance (Sec. 56)
3. Suit for damages for repudiation of the contract (Sec. 60)
4. Suit for Interest or Special Damages (Sec. 6l)
() Suit for price (Sec. 55)
Ihe buyer is legally bound to pay the price for the goods he has purchased.
(4) Where under a contract of sale the property in the
goods has passed to the buyer and he wrongfully pay The buyer is legally bound to
neglects or refuses to pay for the goods as per the the price fOr the goods he
terms of the contract. the seller may sue him for the has purChased.
price of the goods Section 55(1)]
(0) On the other hand, if the property in goods has not passed to the buyer, as a general rule,
the seller can only sue for damages: he cannot file a suit for the price. However, Section
55(2) provides that if the contract of sale stipulates the payment of the price on a certain
day irespective 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 goods has not passed.
Ihus, where the contract of sale stipulates payment of the price on a certain day, transfer
of ownership and delivery of the goods are immaterial to sue the buyer for recovery of
price.
 GOODS ACT, 1930
212 PART Il:SALE OF

() Suit for damages for Non-Acceptance (Sec: 56)

Where the buyer wrongfully neglects or refuses to accept Where the buyer
wrongtuly
goods, the seller may sue him for the damages for non neglects or refuses to
is to be
acceptance. In such a case the amount of damages, section accept
goods, the selter may sue
calculated in accordance with the rules contained in for the damages for non hiacm
73 of the Indian Contract Act. According to Sec.
44 of the cerptance
seller is
Act, where the property in goods has passed, the
entitled to recover:
delivery; and
any lossoccasioned by the buyer's refusal or neglects to take
L
and custody of the goods.
i1. any reasonable charge for the care
(i) Suit for Damages for Repudiation of the Contract Where the buyerrepudiates
(Sec. 60) contract before the date of
the
Where the buyer repudiates the contract before the date delivery is known as anticipatory
of delivery known as anticipatory breach of contract as per breach of contract
Section 39 of the Indian ContractAct, the seller may either:
() treat the contract as subsisting and wait till the date
of delivery, or
(i) treat the contract as rescinded and sue the buyer for anticipatory breach of contract.
(iv) Suit for interest or Special Damages (Sec. 61)
When under acontract of sale, the seller tenders the goods to the buyer and the buyer wrongfuly
refuses or neglects to accept and pay the price, the seller has a further right to claim interest
on the amount of the price. The interest may be calculated from the date of the tender of the
goods or from the date on which the price was payable. It is important to note that the seller
can claim interest only when he is entitled to recover the price. If the unpaid seller has the only
remedy to claim damages, then he will not be entitled to any interest. The rate of interest to be
awarded is at the discretion of the court.

Buyer's Remedies against the Seller

There arecertain rights, which can beexercised by the buyer against the seller in case there
a breach of contract by the seller. The buyer has the following rights:
1. Suit for damages for non-delivery.
2. Suit for specific performance.
3. Suit for breach of warranty.
4. Suit for repudiation of contract before due date.
5. Suit for recovery of the price along with
interest.
Suit for Damages for Non-Delivery (Sec. 57)
Where the buyer is: ready and willing to accept the delivery of the goods but the seller wrongfuly
neglects or refuses to deliver the goods to the buyer, in such a case, the buyer may Suetheseller
for damages for non-delivery.
 CH. 19 :RIGHTS OF AN
UNPAID SELLER 213

Suit for Specific Performance (Sec. 58)

Subject tothe provisions of Chapter II of the
Specific Relief Act,
contractto deliver specific or ascertained goods, the Court may, if1877,
it
in any suit for breach of
thinks fit,
ofthe plaintif, by its decree direct that the contract shall be performed on the application
specifically, without
givingthe defendant the option of retaining the goods on
payment of damages. The decree may be unconditional, or In acotract of sale of ascer
uponsuch terms and conditions as to damages, tained or specific goods, f fthe
of the priceor otherwise, as the Court may deem payment
just, and selerfails to deliver the goods,
goc
the application of the plaintiff may be made at any time the buyermay sueforthe specific
before the decree. periormance of the contract.
In acontract of sale of ascertained or specific goods, if
the seller fails to deliver the goods, the buyer may file a suit for
be contract. The court may then order for the the specific performance of
available to the buyer only if:
specific performance. However, this remedy is
() The goods are of unique nature; and
(i) The damages are not suitable remedy.
EXAMPLE.
A'agreed to sellarare painting to B'for 10,00,000. Later on A'
refused todeliver the painting
to the buyer on due date. B' may approach the court for
granting an order directing A' to
specifically perform his promise.
Suit for Breach of Warranty (Sec. 59)
Where there is a breach of warranty by the seller, or where breach of condition on the part
of the seller is to be treated as a breach of
warranty, the
buyer can claim damages from the seller for such breach. Where there is a breachAof war
I the buyer has already paid the price, his remedy only is ranty bythe seller the buyer can
to sue for
damages: claim damages from the seller
(1) Where there is a breach of warranty by the seller, or for such Oreach
where the buyer elects or is compelled to treat any
breach of a condition on the part of the seller as a breach of warranty, the buyer is not
by reason only of such breach of warranty entitled to reject the goods; but he may:
(a) Set up against the seller the breach of warranty in diminution or extinction of the
price; or
(b) Sue the seller for damages for breach of warranty.
(4) The fact that a buyer has set up a breach of warranty in diminution or extinction of the
price does not prevent him from suingfor the same breach of warranty if he has suffered
further damage
Suit for Repudiation of Contract before Due Date (Sec. 60)
Where the seller rescinds the contract before due date of delivery, the buyer may either treat
the contract as subsisting (ie, existing and operative) and wait till the expiry of due date of
delivery: OF treat the contract repudiated and bring an action against the seler for the recovery
of the damages.
214 PART II:SALE OF GOODS ACT, 1930

Suit for Interest (Sec. 61)

Where the price has already been paid by the buyer and the seller fails to deliver
due date, the buyer has a right to sue the seller for interest on the amnount of the
interest will be calculated from the date whenit was due and the date it was paid. the prigoods
ce. Theo
(1) Nothing in this Act shall affect the right of the seller or the buyer to recover

recoverinsuchtearbleseto,
special damages in any case whereby interest or special damages may be
torecover the money paid where the consideration for the payment has failed o
(2) In the absence of a contract to the contrary, the Court may award interest at
it thinks fit on
the amount of the price. rate.
(a) to the seller inasuit by him for the amount of the price fromthe date of
of the goods or from the date on which the price was payable. the tender
(b) to the buyer in a suit by him for the refund of the price in a case of a breach ot
contract on the part of the seller from the date on which the payment
was made
DISCUSSION OUES TIONS
1. Define the term "Unpaid Seller" as per the Sale of Goods Act. Explain the rights of
Seller (a) as against the goods, (b) as against the buyer personally. Unnat
2. Who is Unpaid Seller? When he can resell the goods?
3. What is meant by Unpaid Seller? Explain the Unpaid Seller's right of lien
over the goods
4. "The right of stoppage in transit is an extension of the right of lien".
How the right of stoppage in transit is exercised by an unpaid seller? Discuss the statement.
5. How stoppage in transit is affected? When does transit terminate?
6. Discuss the different types of remedies available to buyer
contract of sale. against the seller for breach of
7. Compare the right of lien and right of stoppage in
transit of an unpaid seller.
8. Explain the effect of sub-sale or pledge by the
buyer on unpaid seller's right of lien and
stoppage in transit.
9. Discuss the remedies available to the seller
when the buyer repudiates the contract betore
due date. Is there any case in which the buyer
may perform the contract on due dat
notwithstanding the earier repudiation by him?
10. In what circumstances can the right of
stopping the gOods in transit can be exercised?
11. "Aseller has several rights against the buyer."
Discuss the rights of seller against the buye
PRACTICAL PROBLEMS
1. S sells goods to T. T pays to S
through a cheque. Before T could obtain the
goods, his cheque was dishonoured by the bank. S, therefore, refuses to deliverdelivels
the goods
until paid. Is S's action justified?
2. Singh of Delhi orders Kaur of Punjab, to deliver certain goods to him at Delhi. Whilethe
goods are lying at the Delhi Railway station, the station master informs Singhthatthe
goods are held at Singh's risk. But Singh has become insolvent. Has Kaur any rightover
the as an unpaid seller?
3. Ajay sold his car to Vijay for75,000. After inspection and satisfaction, Vijay paid 25,00
and took possession of the car and promised to paythe remaining amount within a month
Later on Vijay refuses to give the remaining anmount on the ground that the car wasnol
in a good condition. Advise Ajay as to what remedy is available to him against Vijay.