commercial law

1. Post Graduate and Research Department of Commerce
Commercial Laws
Dr. S. CHANDRASEKARAN
Assistant Professor of Commerce
PG & Research Department of
Commerce
Vivekananda College
Tiruvedakam West
Madurai

2. Sale of Goods Act
Remedial Measures

3. Remedial Measures
Introduction
A contract is comprised of reciprocal promises. In a contract
of sale, if seller is under obligation to deliver goods, buyer has to pay
for it. In case buyer fails or refuses to pay, the seller is an unpaid
seller. The term unpaid seller may be defined as the seller to whom
the full price of the goods sold has not been paid.
Who is an Unpaid Seller? (Sec. 45)
Sec. 45 of the Act defines an unpaid seller thus:
"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 fulfi11ed by reason of the dishonour of the
instrument or otherwise." Thus, a seller is unpaid seller, if:

4. (i) Whole of the price has not been paid or tendered;
(ii) When a bill of exchange or other negotiable
instrument has been received towards payment and that has
been dishonoured.
These are two circumstances in which a seller can be
called an unpaid seller. The se11er remains unpaid seller so
long as any portion of the price, however, small remains
unpaid. But if the buyer has tendered the price and the seller
wrongfully refuses to accept the tender, he cannot be called an
unpaid seller.
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.

5. RIGHTS OF AN UNPAID SELLER
An unpaid seller has two-fold rights. They
are:
(A) Rights against goods
(B) Rights against the buyer personally
A. Rights of an Unpaid Seller Against Goods
This right is studied under the following two
heads:
1. Where the ownership of the goods is transferred
to the buyer.
2. Where the ownership of the goods is not
transferred to the buyer.

7. 1. Rights of unpaid Seller where the Ownership of the Goods
is Transferred to the Buyer
According to Sec. 46 of the Act, the unpaid seller has three
distinct rights even though property in the goods is transferred to
the buyer. These rights are: (a) Right of lien, (b) Right of
stoppage in transit and (c) Right of resale.
(a) Right of Lien
The word 'lien' means 'to retain possession of'. According
to Sec. 47 (I):
"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." '

8. RULES RELATING TO LIEN
(i) The seller may exercise his right of lien notwithstanding
that he is in possession of the
goods as agent or bailee for the buyer.
(ii) The lien depends on actual possession of goods and not
on title.
(iii) Unpaid seller can exercise the lien only for the price
and not for any other charges.
(iv) Where an unpaid seller has made part delivery of the
goods, he may exercise his right of
lien on the remainder.
(v) The right of lien is not lost, if the seller has obtained a
decree for the price of goods (Sec. 49).

9. LOSS OF LIEN
The right of lien depends only upon the possession of
the goods. Thus, the right of lien is lost as soon as the
possession of the goods is lost. The circumstances, in which
the unpaid seller's lien is lost is discussed under the following
cases:
(a) Sec. 49 (1) (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) Sec. 49 (1) (b) "when the buyer or his agent lawfully
obtains possession of the goods:
(c) Sec. 49 (I) (c) "by waiver thereof." Waiver may be
express or implied. The express waiver is the waiver when the
contract of sale provides in express terms that the seller shall
not retain the possession of the goods even if the price is not
paid.

10. (b) Right of Stoppage in Transit (Sec. 50 to 52)
The right of stoppage in transit means the right of stopping future
transit of the goods while they are with a carrier for the purpose of
transmission to the buyer, resuming possession of them and retaining
possession until payment or tender of the price.
According to Sec. 50, "Subject to the provisions of this Act, when
the buyer of the goods
becomes insolvent, the unpaid seller who has parted with the possession of
the goods, has the right of stopping them in transit, that is to say, he 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 price."
. The second right which is available to an unpaid seller is the right to
stoppage in transit. This
light can be exercised if the following conditions are satisfied:
(i) The seller must be unpaid.
(ii) The buyer must be insolvent.
(iii) Property in the goods must have passed.
(iv) Seller has parted with the possession of the goods.
(v) Buyer has not got the possession of the goods.

11. Duration of Transit (Sec. 51)
Sec. 51 lays down, that "Goods are deemed to be in
the 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."
The carrier may hold the goods as:
(a) Sellers agent: there is no transit because the goods are
under the seller's lien.
(b) Buyer’s agent: the seller cannot exercise his right of
stoppage in transit because the buyer
has acquired possession.
(c) Independent contractor: The seller has and can
exercise the right of stoppage in transit.

12. When Transit comes to End? (Sec. 51)
The transit is deemed to be at an end and the seller cannot
exercise his right of stoppage in the following cases:
1. 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. [Sec. 51 (2)].
2. When the goods have arrived at their destination and the carrier
acknowledges to the buyer or his agent that he holds the goods or
his behalf, the transit is at an end [Sec. 51 (3)].
3. When the carrier wrongfully refuses to deliver the goods to the
buyer or his agent, the
transit is deemed to be at an end. [51 (6)].
4. If part delivery of the goods has been made with the intention of
delivering the whole,
transit is terminated even if the remainder is in transit. [Sec. 51 (7).

13. Distinction between Right of Lien and Right of
Stoppage in Transit
Lien
The right of lien can exercise even when the. buyer is able to
pay but does not pay.
This right. comes into existence and continues so long as the
seller has got possession of the goods
This right comes to an end as soon as the goods go-out of the
possession of the seller.
This right is to retain the possession of the goods
This right remains in force till the right of stoppage in transit
starts.
Possession is the test of this right

14. Stoppage in transit
The right of stoppage in transit arises when' the buyer is
insolvent and is unable to pay
The right comes into operation. only after., the seller has
parted with the possession of the goods
This right comes to an and as soon as the goods are
delivered to the buyer.
This right is to regain the possession of the goods
This right starts when the right of lien comes to an end and
remains in force till the delivery of the goods to the buyer.

Test for this right is the non-delivery of the goods to the
buyer.

15. EXCEPTIONS
1. Seller s consent. A sub-sale by the buyer with the assent
of the seller will defeat the seller's right of lien and the right of
stoppage.
2. Transfer of document of tit/e. Where a document of title to the
goods has been issued, a
lawfully transferred to any person as buyer or owner of the
goods, and that person transfer the document to a purchaser in
good faith and for valuable consideration, the unpaid seller's lien
or
stoppage in transit is destroyed.

16. B. Rights of an Unpaid Seller against the Buyer Personally
1. Suit for Price (Sec. 55)
2. Suit for Damages for Non-acceptance (Sec. 56)
3. Suit for Repudiation of the Contract before
due Date (Sec. 60)
4. Suit for Interest (Sec. 61)
(c) Right of Resale (Sec. 54)
1. Where the goods are Perishable
2. Where Unpaid Seller gives Notice of his
Intention
3. Where the Seller Expressly Reserves his
Right of Resale

17. REMEDIES FOR BREACH OF CONTRACT OF SALE
Remedies available to seller
1. Suit for price (Sec. 55)
2. Suit for damages for non-acceptance of goods (Sec: 56)
3. Suit for damages for repudiation of contract (Sec. 60)
4. Suit tor interest (Sec. 6)
Remedies available to buyer:
1. Suit for damages for non-delivery of goods (Sec. 57)
2. Suit for damages for repudiation of the contract (Sec. 60)
3. Suit for specific performance (Sec. 58)
4. Suit for breach of warranty (Sec. 59)
5. Suit for interest (Sec. 6)

18. Auction Sales (Sec. 64)
Auction sale is a public sale, where goods are offered to
be taken by the highest bidder from among the public.
The auction sale is usually organised by giving
advertisements about the goods to be sold
Along with other terms and conditions of the auction sale. The
auctioneer gives wide publicity for the sale of the goods by
auction, and fixes the time and place for it. The intending
buyers, known I as bidders, can inspect the goods, during the
time fixed by the auctioneer, before or at the time of sale.
.

19. RULES FOR AUCTION SALE
The rules regarding auction sale are as follows :-(Sec. 64)
1. Where goods are put up for sale in lots •. each lot is prima
facie deemed to be the subject
of a separate contract of sale. (Sec. 64(1))
2. The sale is complete when the auctioneer announces its
completion the fall of hammer or in other customary manner,
and until such announcen1elit is made, any bidder may retract
his bid. (Sec. 64(2)).
3.A right to bid may be reserved expressly-by or on behalf of
the seller and where such right
is expressly so reserved but not otherwise, the seller or anyone
person on his behalf may, subject to the provisions hereinafter
contained, bid at the auction. (Sec. 64(3))

20. 4.Where the sale is not notified to be subject to a right of
the seller, it shall not be lawful for the seller to bid himself
or to employ any person to bid at such sale or for the
auctioneer knowingly to take any bid from the seller of any
such person; and any sale contravening this rule may be
treated as fraudulent by the buyer. (Sec. 64(4)) .
5.The sale may be notified to be subject to a reserved or
upset price. (Sec. 64(5)).
6.If the seller makes use of pretended bidding to raise the
price, the sale is voidable at the
option of the buyer. (Sec. 64(6).