Rights of lien of goods for unpaid seller

2. OM STERLING
GLOBAL UNIVERSITY

3. Topic: Unpaid Seller
Program – L.L.B. 2nd semester
Subject – Mercantile law
Session – 2022-23
Submitted to:- Submitted by:-
Adv. Kush Ahuja Udit Gupta
221050101009

4. UNPAID SELLER
AND HIS RIGHTS

5. 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

6. Rights of an Unpaid Seller
• When 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

7. Overview of rights of Unpaid Seller

8. RIGHT OF LIEN
• Possession is essential to create right of lien
Lien is of two kinds:
1. General Lien
2. Particular/Specific Lien

9. Right of Lien of Unpaid Seller –Sec. 47
• Applicability:
• Goods sold without any
stipulation as to credit
• Goods sold on credit,
credit-term expires
• Buyer becomes
insolvent, seller
possesses goods

10. Sec. 48 - Part Delivery of Goods
• 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”

11. Sec. 49 – Termination ofLien
1. 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.

12. Right of Stoppage in Transit-Section
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

13. Section 51
Duration of Transit
• Transit ends when:
• Buyer takes delivery of goods
• Buyer/his agent takes deliver of
goods.
• Carrier/bailee atappointed destination
acknowledges possession of goods
• Carrier/bailee wrongfully refuses to
deliver goods to buyer/his agent
• Before appointed destination i.e. in
anticipation

14. 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 is
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
stoppage in transit

15. Right of stoppage in transit is lost when:
• Buyer/his agent obtains delivery of
goods from carrier/bailee
• After arrival of goods atappointed
destination, carrier/bailee acknowledges
to buyer that he holds goods on his behalf
Carrier/bailee wrongfully refuses to
• Deliver goods to buyer/his agent

16. Right of Resale of unpaid seller
-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.

17. 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 areasonable
time after the notice
• Where seller has expressly reserved
his right of resale in case of default

18. If the seller has given notice to 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.

19. If notice has not been given to the buyer:
• Seller cannot recover damages
from buyer.
• Seller has to pay the profits ifany to
the buyer.
• Seller can claim difference between
the contract price and the market
price at the date of the breach.

20. •Ifproperty in goods has not passed to buyer
,
seller has the Right to Withhold Delivery.
Section 25-Reservation of Right of Disposal
This is retained by seller when the seller
imposes certain conditions and until conditions
are fulfilled.

21. Sec. 55 &56 – Other Rights
• 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 aspecific agreement to that
effect.If there is no agreement, seller
may charge interest on price when it
becomes due.

22. Effectof Sub-Sale or Pledge by
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.

23. THANK YOU