about unpaid seller

1. UNPAID SELLER :-
Seller:- A personwho sells the goods or agrees to sell the goods is called
seller.
Unpaid: - It means payment is not made or without payment.
In simple words, "Unpaid seller" means a personwho has sold the goods for a
price but price has not been paid to him.
Sales act defines the "unpaid seller" in the following words :
Unpaid SellerIs A Person:-
i. To whom the whole price has not been paid or tendered.
ii. And where a bill of exchange or other negotiable instruments has been
accepted by him as a condition on which it was received has not been fulfilled
by reason of dishonor of the instrument or otherwise.
It is also declares that any person who is in the position of a seller like agent is
also considered seller.

2. Rights Of UnpaidSeller or Lien Of UnpaidSeller :-
He has following important rights against goods.
1. RIGHT OF LIEN :-[SEC.46 (1)(A) AND 47 TO 49]
“KEEP THE GOOD IN HIS HIS OWN POSSESSION”
For the recovery of price an unpaid seller has a right to keep the goods in his
own possession.itis a available to the unpaid seller of the goods who is in
possessionof them where-
a) The goods have been sold without any stipulation as to credit
b) The goods have been sold on credit ,but the terms of credit has expired
c) The buyer becomes insolvent(sec.47(1))

3. In the following cases, an unpaid seller loses his lien on the goods:
Termination OfLien :-
An unpaid seller loses the lien in the following cases :
1. Termination By Waiver :-
If an unpaid seller himself waives his right of lien then it will be terminated.
2. Goods in Buyer's Possession:-
When a buyer or his agent obtains the possessionfor goods lawfully, unpaid
seller lien terminates.
3. Does NotReserve The Rightof Disposal:-
When unpaid seller fails to reserve the right of disposalof the goods at the times
of delivery to the bailee for transferring it to the buyer. Then this right of lien
terminates.Example :- Mr. Hunny sells the goods to Mr. Abhijit for Rs. 10 lac.
Mr. Abhijit pays 5 lac and promises to pay the remaining 5 lac after two month.
Mr. Hunny has a right of lien on the goods.
2. RIGHT OF STOPPING [SECS.46 (1)(B)AND 50 TO 52]:-
“RIGHT OF STOPPING GOODS IN TRANSIT “
If buyer becomes insolvent, an unpaid seller has a right of stopping the
goods in transit.
He has further right of resuming possessionof the goods as long as they
are in the course of transit,and retaining possessionuntil payment or
tender of the price.(extension of right of lien)
it is available to the unpaid seller –
a) When the buyer becomes insolvent,and
b) When the goods are in transit (sec 50)
Transit comes to an end and the seller loses the right to stop the goods in transit
in the following cases:

4. 1. Delivery to the buyer: “When goods are delivered to the buyer or his
agent, the transit comes to an end” [Section 51(1)]. Where the buyer does
not accept the goods, the transit does not end even if the goods have
reached the place of destination.
2. Interception by the buyer: “If the buyer or his agent in that behalf obtains
delivery of goods before their arrival at the appointed destination, the
transit comes to an end.” [Section 51(2)]. The buyer or his agent may take
delivery with or without the consent of the carrier. However, as far as the
seller’s right of stoppage is concerned, that comes to an end.
3. Acknowledgment to the buyer: “If after arrival of the goods at the
appointed destination, the carrier or the other bailee acknowledges to the
buyer or his agent that he is now holding the goods on his behalf, the
transit period ends. It is immaterial that the goods are still with the carrier
or the buyer has indicated a further destination” [Section 51(3)].
However, there must be a very clear acknowledgement to put an end to
the original contract of carriage. (It should be noted that where the goods
have to be carried by more than one carrier as part of the original
contract, the transit continues till the goods arrive at their ultimate
destination).
4. Delivery on ship chartered by buyer: “Where the goods are delivered to a
ship chartered by the buyer, and if the circumstances show that the carrier
is acting as an agent of the buyer, then the transit comes to an end as soon
as the goods are loaded on board the ship” [Section 51(5)].
5. Wrongful denial to deliver: “Where the carrier or the 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”[Section 51(6)]. However, if
that has been done rightfully, the transit may not end (e.g., on refusal by
buyer to pay freight charges when their payment is a precondition to
delivery).

5. 6. When part delivery of goods is made to the buyer or his agent: “If part
delivery shows an agreement to give up possession of the whole of the
goods, transit comes to an end. However, in general, delivery of a part is
not equivalent to delivery of the whole and the seller can stop the
remainder of the goods”[Section 51(7)].
Example :- "X" sells 100 bales of cottonto "Y" but delivery will be
two stages. "X" delivers 50 bales first. Later on he comes know that
"Y" has become insolvent. "X" can stop delivery of bales in transit.
3. RIGHT OF RESALE :-
“RIGHT TO SALE HIS GOODS”
An unpaid seller is considered the owner of the goods until he is not
paid by the buyer. So he has a right to sell his goods subject to few
conditions.
a) Where the goods are of perishable nature ; or
b) Where he gives a notice to the buyer of his intension to re-sale the
goods and the buyer does not within a reasonable time pay or
tender the price.
If on a resale ,there is a loss to the seller(i.e difference between the
contract price and the amount realized on resale of the goods ),he
can claim it from buyer as damages for breach of contract.
Example :- "X" sells one horse to "Y" on credit. "Y" does not pay.
"X" can resell to other person.
4. Right of withholding Delivery :-
The unpaid seller has a right of withholding the delivery of goods where the
property in the goods has not passed to the buyer.

6. RIGHT OF AN UNPAID SELLER AGAINST THE
BUYER PERSONALITY
(FROM BOOK)
i. Suit For Price :- If the goods have passed to the buyer and buyer refuse to
pay the price, the seller can sue for price.
Example :- "M" sells the goods to "Y" for Rs. 5 lac. "Y" refuses to pay. "M"
can sue for price.
ii. Suit For Damages For Non Acceptance :- If buyer refuses to accept and
pay for the goods, the seller has the right to sue him for damages non-
acceptance. He can recover only damages and not full price.
iii. Suit For Interest & Special Damages :- The unpaid seller can recover the
reasonable interest on the unpaid price goods sold. The seller can also sue the
buyer for special damages where both the parties are aware of such loss at the
time of contract.