RIGHTS OF UNPAID SELLER

                               RIGHTS OF UNPAID SELLER

  Seller

A party that makes, offers or contracts to make a sale to an actual or potential buyer. 

" Unpaid seller"

 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 fulfilled by reason of the dishonour of the instrument 

Note
" seller" includes any person who is in the position of a seller, as, for instance, an agent of the seller.

 Unpaid seller' s rights.

(a) a lien on the goods for the price while he is in possession of them;

(b) in case of the insolvency of the buyer a right of stopping the goods in transit after he has parted with the possession of them;

(c) a right of re- sale as limited by this Act.

Seller' s lien.

The unpaid seller of goods who is in possession of goods 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.

(2) The seller may exercise his right of lien even he is in possession of the goods as agent or bailee for the buyer.
 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.

49. Termination of lien.

(1) The unpaid seller of goods loses his right of lien in the following cases:

(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) when the buyer or his agent lawfully obtains possession of the goods;

(c) by waiver 

(2) The unpaid seller of goods, having a lien , does not lose his lien by reason only that he has obtained a decree for the price of the goods.

 Stoppage in transit

50. Right of stoppage in transit.-
when the buyer of 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 the price.

51. Duration of transit.-

(1) Goods are deemed to be in 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.

(2) 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.

(3) If, after the arrival of the goods at the appointed destination, the carrier or other bailee acknowledges to the buyer or his agent that he holds the goods on his behalf and continues in possession of them as bailee for the buyer or his agent, the transit is at an end and it is immaterial that a further destination for the goods may have been indicated by the buyer.

(4) If the goods are rejected by the buyer and the carrier 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.

(5) When goods are delivered to a ship chartered by the buyer, it is a question depending on the circumstances of the particular case, Whether they are in the possession of the master as a carrier or as agent of the buyer.

(6) Where the carrier or 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.

(7) Where part delivery of the goods has been made to the buyer or his agent in that behalf, the remainder of the goods may be stopped in transit, unless such part delivery has been given in such circum- stances as to show an agreement to give up possession of the whole of the goods.

52. How stoppage in transit is effected.-

(1) The unpaid seller may exercise his right of stoppage in transit either by taking actual possession of the goods, or by giving notice of his claim to the carrier or other bailee in whose possession the goods are. Such notice may be given either to the person in actual possession of the goods or to his principal. In the latter case the notice, to be effectual, shall be given at such time and in such circumstances that the principal, by the exercise of reasonable diligence, may communicate it to his servant or agent in time to prevent a delivery to the buyer.

(2) When notice of stoppage in transit is given by the seller to the carrier or other bailee in possession of the goods, he shall redeliver the goods to, or according to the directions of, the seller. The expenses of such re- delivery shall be borne by the seller.

Transfer by buyer and seller

53. Effect of subsale or pledge by buyer.-

(1) Subject to the provisions of this Act, the unpaid seller' s right of lien or stoppage in transit is not affected by any sale or other disposition of the goods which the buyer may have made, unless the seller has assented thereto: Provided that where a document of title to goods has been issued or lawfully transferred to any person as buyer or owner of the goods, and that person transfers the document to a person who takes the document in good faith and for consideration, then, if such last men- tioned transfer was by way of sale, the unpaid seller' s right of lien or stoppage in transit is defeated, and, if such last mentioned transfer was by way of pledge or other disposition for value, the unpaid seller' s right of lien or stoppage in transit can only be exercised subject to the rights of the transferee.

(2) Where the transfer is by way of pledge, the unpaid seller may require the pledgee to have the amount secured by the pledge satisfied in the first instance, as far as possible, out of any other goods or securities of the buyer in the hands of the pledgee and available against the buyer.

54. Sale not generally rescinded by lien or stoppage in transit.-

(1) Subject to the provisions of this section, a contract of sale is not rescinded by the mere exercise by an unpaid seller of his right of lien or stoppage in transit.

(2) Where the goods are of a perishable nature, or where the un- paid seller who has exercised his right of lien or stoppage in transit gives notice to the buyer of his intention to re- sell, the unpaid seller may, if the buyer does not within a reasonable time pay or tender the price, re- sell the goods within a reasonable time and recover from the original buyer damages for any loss occasioned by his breach of contract, but the buyer shall not be entitled to any profit which may occur on the re- sale, If such notice is not given, the unpaid seller shall not be entitled to recover such damages and the buyer shall be entitled to the profit, if any, on the re- sale.

(3) Where an unpaid seller who has exercised his right of lien or stoppage in transit re- sells the goods, the buyer acquires a good title thereto as against the original buyer, notwithstanding that no notice of the re- sale has been given to the original buyer.

(4) Where the seller expressly reserves a right of re- sale in case the buyer should make default, and, on the buyer making default, re- sell, s the goods, the original contract of sale is thereby rescinded, but without prejudice to any claim which the seller may have for damages.