Thursday, 18 August 2011

Write a note on Unpaid Seller or Discuss the rights of unpaid seller against the goods and also tell those circumstances under which he looses the lie


Seller :- A person who 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 person who 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 Seller Is 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.

Rights Of Unpaid Seller or Lien Of Unpaid Seller :-

He has following important rights against goods.

1. Right of Lien :-
For the recovery of price an unpaid seller has a right to keep the goods in his own possession.

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 :-
If buyer becomes insolvent, an unpaid seller has a right of stopping the goods in transit.

Example :- "X" sells 100 bales of cotton to "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 :-
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.

Example :- "X" sells one horse to "Y" on credit. "Y" does not pay. "X" can resell to other person.

4. Right of Delivery :-
The unpaid seller has a right of with holding the delivery of goods where the property in the goods has not passed to the buyer.

5. Right of Claim :-
The unpaid seller has also a right to claim the buyer for the prices of goods.

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.

Termination Of Lien :-

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 possession for goods lawfully, unpaid seller lien terminates.

3. Does Not Reserve The Right of Disposal :-
When unpaid seller fails to reserve the right of disposal of the goods at the times of delivery to the bailee for transferring it to the buyer. Then this right of lien terminates.


cp 10 May 2014 at 19:32  

What do you mean by that the buyer or agent lawfully obtains possession of goods?

Anonymous,  17 January 2015 at 07:04  

where is the conclusion?

daniel mwakasendile 29 May 2016 at 03:09  

How a seller became insolvency and what is the effect in agreement to sell

Unknown 4 December 2016 at 00:11  

it was helpful. Can you make a note on Passing of Property?

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