An unpaid seller is a seller who has not received full payment for goods sold. An unpaid seller has certain rights against the goods and buyer, including the right of lien, right of stoppage in transit, and right to resell the goods. The right of lien allows the seller to keep possession of goods until full payment is received. The right of stoppage in transit allows the seller to regain possession of goods in transit if the buyer becomes insolvent. The unpaid seller can also sue the buyer for the price, damages for non-acceptance, or lost profits if the buyer breaches the contract.

1. By : Vipin Joshi

2. Unpaid Seller
A Seller of Goods is deemed to be an Unpaid
Seller when :-
1. The price must be due but not paid
a. When the seller hasn’t been paid any amount by the buyer at all.
b. When the seller has been paid the large amount but small portion of
payment remains to be paid.
2. The Payment is made by a Negotiable Instrument (Like
Cheque) and that has been dishonored.

3. Point to be consider.
 Where the goods have been sold on credit, the seller cannot
be called as an unpaid seller during the credit period unless
the buyer becomes insolvent.
On the expiry of credit period if the price remains unpaid,
then only the seller will become an unpaid seller.

4. Rights of Unpaid Seller
Unpaid Seller has the right against goods as well as
against the buyer.

6. Right of Lien
Right of Lien means the Right to retain the possession of goods until
full price is received.
Seller can exercise his right of lien when :-
 He is the unpaid seller.
 He must be in the possession of goods.
 The goods have been sold on credit, but the term of credit has expired.
 The buyer becomes insolvent.
Seller can’t exercise his right of lien when :-
 The Possession of the goods by the seller must not expressly exclude
the right to lein.
 The lein can be exercised by the unpaid seller only for the price and not
for any other charges such as warehouse or dock charges.
 Where an unpaid seller has made part delivery of the goods, he may
exercise his right of lien on the remainders only.

7. Right of Stoppage in Transit
Transit :- Transit is an intermediate stage between the handover of goods
by seller to a carrier or bailee to send or deliver it to the buyer or his
agent.
The right of stoppage in transit is a right of stopping the goods in transit
after the unpaid seller has parted with the possession of the goods.
He has the further right of resuming the possession of the goods as long
as they are in the course of transit, and retaining possession until
payment or tender of the price. It is available to the unpaid seller :-
a) When the buyer becomes insolvent.
b) When the goods are in transit.
The Right of Stoppage of Transit is an extension of the Right of
Lien, but it arises only on the insolvency of the buyer and when
the goods are in transit.

8. The carrier may hold goods-
1. As seller’s agent. In this case seller has lein on goods and the
question of right of stoppage in transit doesn’t arise.
2. As buyer’s agent. In this case the seller cannot exercise his right
of stoppage in transit.
3. In an independent capacity. In this case seller has, and can
exercise the right of stoppage in transit by giving notice of his
claim to the carrier, who holds the goods(as bailee)
Transit ends when :
 Buyer/his agent takes delivery of goods.
 If the carrier or bailee acknowledge to the buyer that he holds the
goods on his behalf.

9. Right of Resale
The unpaid seller can resell the goods :-
 Where the goods are of perishable nature.
 Where he gives notice to the buyer of his intention to resell the goods and
the buyer does not within a reasonable time pay or tender the price.
If there is a loss in resale then the seller can claim the damages
(difference between contract price and resale price) from the buyer
for breach of contract.
If there is a profit in resale then the seller is not bound to hand it over
to the buyer because the buyer can’t be allowed to take advantage of
his own wrong.
In case the notice is not given then seller can’t recover loss and could
get a claim from buyer for profit on sale.

11. Suit for Price
Suit for price have two cases.
 Where property has passed.
If the good has delivered to the buyer and the buyer wrongfully
neglects or refuses to pay for goods, the seller may sue him for the
price of goods.
 Where property has not passed.
If in a contract of sale the price is payable on a certain day
irrespective of delivery and the buyer wrongfully neglects or
refuses to pay for goods, the seller may sue him for the price.

12. Suit for damages for non-acceptance
 In this, if a buyer wrongfully neglects or refuses to
accept and pay for the goods, the seller mays sue him
for non-acceptance

13. Repudiation of Contract before due
date
Repudiation basically means refuse, deny or cancel.
Where the contract is repudiated by the buyer before the
due date of delivery the seller may treat the contract as
rescinded and sue for damage for the breach of
contract.

14. Suit for Interest and Special
Damages
 Where there is a specific agreement between the seller and the buyer as to
interest on the price of the goods from the date on which payment,
becomes due, the seller may charge interest on the price when it becomes
due from such day as he may notify to the buyer.
 If Seller loses any opportunity to sell his goods for higher price to another
party because of his contract with seller and at the end buyer breach the
contract, then seller may claim for the damages (difference between other
deal price and contract price)
 In the absence of contract to the contrary, the court may award interest to
the seller in a suit by him at such rate as it thinks fit on the amount of the
price from the date of tender on which the price was payable

15. Thank You!