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RIGHTS OF UNPAID SELLER

A research paper submitted in partial fulfillment of the course Law of


Contracts-II for the requirements of the degree B.A.LL.B.(Hons.) for the
academic session 2019-20.

Submitted By:

Name: Ananya Shukla

Roll Number: 1914

Submitted To:

Dr. Vijay Kumar Vimal

(Faculty of Law of Contracts-II)

August, 2019

Chanakya National Law University, Nyaya Nagar, Mithapur, Patna-800001


Acknowledgement
First of all I am very grateful to my subject teacher Dr. Vijay Kumar Vimal without the kind
support of whom and help the completion of the project would have been a herculean task for
me. He took out time from his busy schedule to help me to complete this project and suggested
me from where and how to collect data.

I acknowledge my family and friends who gave their valuable and meticulous advice which was
very useful and could not be ignored in writing the project. I want to convey most sincere thanks
to my faculties for helping me throughout the project.

Thereafter, I would also like to express my gratitude towards our seniors who played a vital role
in the compilation of this research work.

I would also like to express my gratitude towards the library staff of my college which assisted
me in acquiring the sources necessary for the compilation of my project.

Last, but not the least, I would like to thank the Almighty for obvious reasons.

Ananya Shukla

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Declaration
I hereby declare that the work reported in the BA LL.B (Hons.) Project Report entitled “Right of
Unpaid Seller” submitted at Chanakya National Law University, Patna is an authentic record of
my work carried out under the supervision of Dr. Vijay Kumar Vimal. I have not submitted this
work elsewhere for any other degree or diploma. I am fully responsible for the contents of my
Project Report.

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Introduction
Man has been conducting business since time immemorial. It is an important tool for the
development of economy. However, in order to ensure free and fair trade, certain laws have to be
followed. In order to know about the rights of an unpaid seller we first need to recognize who fits
the category of an unpaid seller.

An unpaid seller is anyone who has sold some goods and he has not got his price in return.
Although it might seem extremely simple but on the ulterior there are lot of complicated laws
which govern the rights of an unpaid seller.

According to section 2(1) of Sale of Goods Act, 1930 (hereinafter referred to as SOGA) Seller is
a person who sells the goods or agrees to sell the goods. Unpaid implies payment is not made or
without payment.

Definition of an unpaid seller has been given under section 45 of SOGA1. It says that an unpaid
seller is a person who has not been paid yet either by cash or other negotiable instruments. In the
case of negotiable instruments, the mere fact that it has been tendered by the buyer doesn’t mean
that seller is not anymore an unpaid seller. He becomes an unpaid seller when even after
tendering it, it is rejected by the bank or as the case may be. Section also provides that any
person who is in the position of a seller e.g. his agent is also considered seller for the purposes of
SOGA. Although ownership of the goods is passed to the buyer after the sale of goods but an
unpaid seller has certain rights.

An unpaid seller has two-fold rights which are as follows:

1. Rights of unpaid seller against the goods.


2. Rights of unpaid seller against the buyer personally.

1
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 or otherwise.

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Objectives
1. To gain an understanding on who is an unpaid seller.
2. To understand the different rights of an unpaid seller.

Hypothesis
An unpaid seller is one to whom the whole of the price has not been paid or a bill of exchange or
such other negotiable instrument given to him has been dishonored. These rights of the unpaid
seller are known as ‘rights in rem’. If the property in the goods has already been passed on to the
buyer, the unpaid seller has certain rights against the goods.

Research Methodology
As the research work for this topic is confined to the library and books and no field work has
been done. Hence, researcher in this research work has opted the doctrinal methodology of
research. For doing the research work various sources have been used. Researcher in the research
work has relied upon the sources like various books and online materials as a source for the
research.

Sources of Data
The researcher has used primary and secondary sources of data for the purpose of research.

Limitations of the Study


Area of limitations - Every study has own limitation due to the limited time, lack of sufficient

financial resources and limited area of survey/study of the subject matter.

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Contents
Acknowledgement .......................................................................................................................... 2

Declaration ...................................................................................................................................... 3

Introduction ..................................................................................................................................... 4

Objectives ....................................................................................................................................... 5

Hypothesis....................................................................................................................................... 5

Research Methodology ................................................................................................................... 5

Sources of Data ............................................................................................................................... 5

Limitations of the Study.................................................................................................................. 5

1. Unpaid Seller under the Sale of Goods Act, 1930 ............................................................... 7

1.1. Duties of an Unpaid Seller ............................................................................................... 7

2. Rights of an Unpaid Seller ................................................................................................. 11

2.1. Rights of an Unpaid Seller against the Goods Sold ....................................................... 11

2.2. Rights of an Unpaid Seller against the buyer personally ............................................... 18

3. Comparison between the Rights and Duties of an Unpaid Seller ...................................... 19

4. Conclusion ......................................................................................................................... 21

Bibliography ................................................................................................................................. 22

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1. Unpaid Seller under the Sale of Goods Act, 1930
In a general sense, an unpaid seller is the one who has sold his goods but has not received the full
price of the goods he has sold by the customer or the carrier. Here it is also important to note that
the seller remains unpaid even if a part of the payment remains unpaid. For example, if A sells a
bike to B worth 50,000 and B pays 48,000 but fails to pay 2,000. A still is an unpaid seller.

Talking legally, an unpaid seller as according to the Sale of Goods Act, 1930 is the person or the
seller of the goods who has been left “unpaid” in the following cases:

When the whole price of the goods sold by the seller has not been paid or tendered to him by the
buyer. For example, A buys a chair worth rupees 4000 from B but refuses to pay the amount, the
rights of B as an unpaid seller arises.

In the case when a bill of exchange or other negotiable instrument has been received as a
conditional payment by the seller and the conditions on which it was received has not been
fulfilled because the dishonor of the instrument has occurred. For example, A buys a television
set from B and the payment has been made via cheque to B, but later the cheque bounces due to
the insufficiency of funds in the account.

A seller also includes any person who is in the position of working as a seller. This also includes
any agent of the seller to whom any bill of lading has been signed or any consignor or agent who
has himself paid. For instance, A buys a washing machine from B, B delivers it to A’s house
through C, A is liable to pay C.

1.1. Duties of an Unpaid Seller


Though there is no express provision relating to the duties of an unpaid seller under the Sale of
Goods Act of 1930, there are certain implied duties which can be understood through the
provisions and those are as follows:

Duty to inform the buyer in case of dishonor of cheque or other negotiable


instrument
 It is the duty of the seller that he informs the buyer of the dishonor of cheque before
exercising his rights as an unpaid seller. As according to Negotiable Instrument Act,

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Section 138 (2), after the dishonor of the cheque has occurred, it is the duty of the payee
or the holder to give a notice in writing to the drawer of cheque within 30 days of the
information by the bank that the cheque has been dishonored and thus make a demand for
such payment.
 It is also the duty of the holder of cheque to present it to the bank within six months from
the date on which it is drawn or within the validity period of the cheque.
 Therefore, it is important to understand that the seller cannot directly exercise his right to
lien, right to stoppage in transit, or right to re-sell without informing the buyer about the
default.

Duty to deliver back the goods after the payment has been made after the exercise of
right to stoppage in transit
 In general it is the duty of the seller to deliver the goods and the buyer to accept them
which may be altered by changing the terms and conditions of the contract.
 But in case of an unpaid seller, he has the right to stop the goods in transit and the right to
lien if there is any default in the payment by the buyer.
 In case the default is rectified, the duty of the seller to deliver the goods resumes and he
shall deliver the goods as according to the terms and conditions of the contract. He is also
bound to deliver them within a reasonable period of time.

Duty to give notice to the carrier or bailee in possession of the goods, or to his
principal for stoppage in transit
 Section 52 of the act empowers the unpaid seller to exercise his right to stoppage in
transit by taking actual possession of the goods or by giving a notice of his claim to the
carrier or bailee who is in the possession of the goods.
 In case of the notice, the duty of the seller arises that he must give the notice within a
reasonable time and under such circumstances that the principal can communicate the
prevention of the delivery to the buyer by exercising his reasonable diligence. The carrier
shall then, re-deliver the goods to the seller according to his directions.

Duty to maintain the goods in a deliverable state


 When the seller exercises his right to stoppage in transit or right to lien, he needs to make
sure after the default is rectified, that the goods are in deliverable state and of the same

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quality and quantity as promised in the contract as the sale is not generally cancelled by
the mere exercise of right to lien or stoppage in transit.

Duty to give notice to the buyer of his intentions to re-sell


 The unpaid seller has the right to re-sell the goods in the cases when the goods are of
perishable nature or when he sends a notice to the buyer during the exercise of his right to
lien or stoppage that he intends to re-sell the goods.
 If even after the notice the buyer does not make the payment within a reasonable time,
the seller has the right to re-sell the goods and recover the damages for any loss due to
breach of contract from the buyer.
 If the seller does not give such a notice to the buyer, he shall not be entitled to recover the
damages from the buyer.

Duty to exercise his right to lien and right to withhold delivery only for payment of
price
 The right to lien can be exercised by the unpaid seller only for the price due by the buyer
and not for any other charges like rent for maintenance or other expenses.
 Also, his right to withhold the property expires as and when the payment is made.

Duty to bear the expenses of redelivery when exercising his right to stoppage in
transit.
 It is well explained in section 52 clause 2 that when the carrier or other bailee who is in
the possession of the goods in transit, redelivers those goods to the seller on account of
notice given by him, he shall bear the expenses of such redelivery. That is to say that the
costs of redelivery shall be borne by the seller himself and not the bailee or the carrier.

Duties arising in case of a sub-sale or pledge by the buyer


 Duty not to exercise his right to stoppage in transit and lien in contradiction to the rights
of transferee:

There are cases when the buyer without establishing his legal title or making the whole payment,
makes a sub-sale or pledges the goods to a third party. In such cases, the rights of an unpaid
seller that is his right to stoppage in transit, right to lien and right to re-sell are defeated and he

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can only exercise such rights upto the extent that it does not affect, or in any case harm the rights
of the third party whether he is a transferee or a buyer of such goods.

 Duty to satisfy the amount secured by pledge to the pledgee out of any other securities of
the buyer:

As already mentioned above, a seller cannot in any way affect the rights of a third party when a
sub-sale or pledge is made by the buyer without establishing his legal title on the goods. The
third party being an innocent party, who bought the goods in good faith, has his rights secured.
Therefore, when the transfer of such goods is by way of pledge, the unpaid seller has a duty to
satisfy the amount secured by the third party. He can do so by any manner or by way of any
other goods of the buyer.

Duty to exercise his right to lien only when he is in the possession of them.
 It is clear from the statute book that an unpaid seller has a lien on the goods for the price
“while he is in possession of them”. Therefore, in case when the unpaid seller does not
have possession of the goods, he cannot have lien on such goods. This has also been
upheld by the Hon’ble High Court of Delhi in the judgment of Pawan Hans Helicopters
Ltd. vs. Aes Aerospace Ltd.
 However in the case of Suchetan Exports Pvt. Ltd. vs. Gupta Coal Ltd. and Ors. The
Hon’ble Supreme Court held that wherein the contract for sale expressly provides that the
seller would retain its lien over the goods and title would pass to the buyer on payment of
the full price of the goods, then the unpaid seller of the goods is entitled to exercise lien
over the goods, even if the possession of the goods may not be with the unpaid seller.

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2. Rights of an Unpaid Seller
The rights of unpaid seller are divided into two broad categories:

 Against goods – Jus in Rem (Latin) these are the rights of the seller with regard to the
goods that he has sold.
 Against buyers – Jus in Personam (Latin) these include the actions that seller can take
against the buyer for non-payment.

2.1. Rights of an Unpaid Seller against the Goods Sold


Under the SOGA, these rights are:

 A possessory lien (particular, not general);


 A right of stoppage in transit; and
 A right of resale.

These rights have been provided in the provisions of S.46 of the SOGA which provides:

Section 46. Unpaid seller’s rights.—

(1) Subject to the provisions of this Act and of any law for the time being in force,
notwithstanding that the property in the goods may have passed to the buyer, the unpaid seller of
goods, as such, has by implication of law—

(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.

(2) Where the property in goods has not passed to the buyer, the unpaid seller has, in addition to
his other remedies, a right of withholding delivery similar to and co-extensive with his rights of
lien and stoppage in transit where the property has passed to the buyer.

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2.1.1. Rights of Lien
For the recovery of price, an unpaid seller has a right to keep the goods in his own possession.
Right of Lien means seller can withhold the delivery of goods to the seller till his payment is
being made. In other words, ‘Lien’ is the right to retain possession of goods and refuse to deliver
them to the buyer until the price due in respect of them is paid or tendered. Section 47 of SOGA
deals with the right to Lien.

The SOGA provides for the conditions under which an unpaid seller will be able to exercise his
right of lien i.e. where the goods are not sold on credit or if they were sold on credit and the term
of the credit has expired or where the buyer becomes bankrupt.

In the case of buyer becomes bankrupt, the lien exists even though the goods were sold on credit
and the period of credit has not yet expired. In cases where the goods have been sold on credit
the presumption is that the buyer will pay the price. If, therefore, before payment the buyer
becomes bankrupt, the seller is entitled to exercise his lien over the goods as security for the
price.

The SOGA also provides that the seller can exercise this right notwithstanding that he is an
agent, bailee or custodian for the buyer.

Example: X sells the goods to Y for Rs. 500. Y pays 250 and promises to pay the remaining 250
after two month. X has a right of lien on the goods.

This right of lien can be exercised only for the non-payment of the price and not for any other
charges, i.e., maintenance or custody charges, which the seller may have to incur for storing the
goods etc. Also, the right of lien extends to the whole of the goods in his possession even though
part payment for those goods has already been made. In other words, the buyer is not entitled to
claim delivery of a portion of the goods on payment of a proportionate price.

However, in those situations where goods have been partially delivered by the seller then he may
exercise his right of lien on the remaining part unless there is an agreement in which he waives
this right. This has been provided in S.48 of the SOGA.

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In the case of Eduljee v. Café John Bros.2 the seller sold a second hand refrigerator to a buyer for
Rs. 120 and it was further agreed that the seller will put that in order at a cost of Rs. 320. The
buyer took the delivery of the refrigerator and admitted that it was working satisfactorily.
Subsequently, two of its parts were delivered to the seller for further repairs. The seller now
refused to deliver it back claiming a lien on them until the amount originally due had been paid.
It was held that once the delivery of the refrigerator had been made to the buyer, the right of lien
had come to an end and the same could not be revived by the seller again by getting the
possession of those goods.

Termination of Lien
An unpaid seller loses his right of lien in the following cases:

 By Waiver

If an unpaid seller himself waives his right of lien then it will be terminated.

 Goods delivered to buyer

When a buyer or his agent or his any representative obtains the lawful possession of goods,
unpaid seller’s right of lien automatically ends.

 No Right of Disposal

When an unpaid seller delivers the goods to the carrier/bailee without reserving the right to
disposal with himself then his right of lien ends.

Section 49 of SOGA provides for the above-mentioned situations in which the seller loses his
right of lien. It further provides that the right of Lien can still be exercised even though the seller
has got a decree from a Court of Law for the payment of price.

2
AIR 1943 Nag. 249

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2.1.2. Right of Stopping the Goods in Transit
The right of stoppage in transit means the right of stopping the goods while they are in transit, to
regain possession and to retain them till the full price is paid. In other words, if buyer has
become insolvent, an unpaid seller has a right of stopping the goods in transit and can resume the
same on the payment of price. This right has been provided in Section 50 of SOGA. This right is
limited to the transit only, the moment the goods are delivered to the buyer, seller cannot
exercise this right. Cave J. has explained the position as “the moment the goods are delivered by
vendor to a carrier to be carried to the purchaser the transitus begins. When the goods have
arrived at their destination and have been delivered to the purchaser or when the carrier holds
them as warehouse for the purchaser or his agent and no longer as carrier, the transitus is at end.”

Moreover, Section 51 of SOGA provides that in case of goods are being delivered to carrier by
land or water then till the time buyer or his agent takes the possession of goods from such carrier
on land or on water, seller can exercise this right. If the buyer takes the possession that means
transit has come to an end and hence, seller cannot exercise this right.

Example: A sells 100 Kgs of wheat to B but delivery will be two stages. A delivers 50 Kgs
wheat in first week of January and will deliver remaining in last week of January. Later on he
comes know that B has become insolvent. A can stop delivery of remaining in transit and can
resume the same on the payment of price.

When the notice of stoppage in transit is communicated to the carrier/bailee having possession of
goods then such person must re-deliver the goods only as per the seller’s instructions and in such
case, the cost of re-delivering the goods will be borne by the seller. This has been provided by
Section 52(2) of SOGA.

Lord Cairns LJ in case of Schotsmans v. Lances and Yorks Rly.3 had made the following
observation in this regard:

“The essential feature of stoppage in transit is that the goods should be in the possession of a
middleman or some other person intervening between the vendor who has parted with and the
purchaser who has not received them.”

3
https://naveenreddyakiti.blogspot.in/2017/03/rights-of-unpaid-seller-rights-of.html

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In Turner v. Trustees of Liverpool Docks4 the cargo of cotton was put on the ship of the buyer
but the goods were made deliverable to seller or their order. Patterson J. while giving judgment
observed that unless the vendor protects himself by special terms, restraining the effect of such
delivery, there is no doubt that delivery was made to him.

In the case of Litt v. Cowley5 after the receipt of notice to stop the goods, the carried by mistake
delivered the goods to the buyer. It was held that the assignees of the insolvent buyer were bound
to deliver it back to seller or be liable to pay damages.

Difference between Right of Lien and Stoppage in Transit

 The seller can exercise his right of lien when the buyer is in default irrespective of his
solvency whereas right of stoppage in transit arises only when the buyer has become
insolvent.
 Right of Lien can be exercised by the seller only when the goods are in actual/physical
possession of the seller whereas right of stoppage in transit becomes available when the
seller has parted with possession and the goods are in the custody of an independent
carrier/bailee.
 The right of lien comes to an end once the seller hands over the possession of the goods
to the carrier for the purpose of transmission to the buyer whereas right of stoppage in
transit becomes available when the seller has parted with possession and the goods are in
the custody of an independent carrier/bailee.
 The right of lien implies retaining the possession of the goods while the right of stoppage
implies regaining possession of the goods.

4
(1851)6 Ex. 543
5
(1816) 2 Marsh 457

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2.1.3. 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 a few conditions.

The right of resale is very important right of an unpaid seller. In the absence of this right, the
unpaid seller’s other right against the goods, namely, ‘lien’ and ‘stoppage in transit,’ is just futile
because these rights only entitle the unpaid seller to retain the goods until paid by the buyer. If
the buyer continues to remain in default, then what else the seller is expected to do with the
goods, especially when the goods are perishable? Hence, Section 54 of SOGA, therefore, gives
to the unpaid seller a limited right to resell the goods in the following cases:

(a) Where the goods are of a perishable nature; or

(b) Where such a right is expressly reserved in the contract in case the buyer should make a
default.

Example: A agrees to deliver a homemade cake to C on credit. C does not pay. A can re-sell it to
any other person.

In the case of RV Ward Ltd. V. Bignall6, there was a contract for sale of 2 cars.The buyer
defaulted in paying a price despite a reasonable notice. The seller then tried to resell but could
find customer only for 1 car. He, then claimed damages for the balance price and advertising
expense. Hon’ble Court held that when the seller resells the goods, the contract is rescinded and
goods once again become his property. Thus, the unsold car became his property and he could
not recover his price. But he could recover the shortfall in the sold car and the advertising
expense.

Where the goods are perishable in nature and the unpaid seller notifies the buyer of his intention
to resell them, if the buyer doesn’t pay within a reasonable time, the seller can resell the goods.
Seller can also recover from the original buyer any damages incurred due to his breach of the
contract under Section 54 (2) of SOGA.

6
(1967)2 All E.R. 449

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In Mysore Sugar Co. Ltd Bangalore v. Manohar Metal Industries7 the buyer having made a
default in taking the goods, the seller gave him a notice on 12.09.1966 that if the buyer did not
lift the goods within three days, the contract would be treated as cancelled. The buyer did not lift
the goods. The seller made a re-sale 30.12.1966. Seller sought to recover the loss from the re-
sale. It was held that there was inordinate delay of over 3 months in making re-sale after the
notice to buyer and due to such delay, particularly in the falling market as in the present case, the
value realized on re-sale did not afford the ground for fixing the damages. If the re-sale had been
properly made in September 1966, the seller would have suffered no loss, and therefore, seller’s
claim for compensation was rejected.

According to the provision of Section 53 of SOGA, the unpaid seller’s right of lien or stoppage
in transitu is not defeated by any resale done by the buyer to a third party without the seller’s
consent. 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.

In the case of Knight v. Wiffen8 A sold 80 maunds of barley out of a large stock lying in his
granary to B. Out of his purchase, B sold 60 maunds to C before the goods had been ascertained
and C obtained delivery order and presented it to A, who informed to C that the barley will be
given to him in the due course. Subsequently, B became insolvent and A wanted to exercise the
right of lien over barley which he had sold to B. It was held that A had assented to sub-sale of
60 maunds of barley, therefore he could not exercise his right of lien over those 60 maunds of
barley, though such a right could be exercised in respect of remainder i.e. other 20 maunds.

Further, in the case of P.S.N.S Ambalavana Chettiar & Co. v. Express Newspapers Ltd.9
Hon’ble Supreme Court of India has held that for the purpose of measure of damages under
SOGA, the re-sale is properly made if the property in the goods re-sold had passed to the original
buyer. On the other hand, if the property in the goods has not passed to the original buyer, the re-
sale is not properly made and therefore, the damages are not awarded accorded to Sale of Goods

7
AIR 1982 Kant 283
8
(1870) 5 QB 660

9
AIR 1968 SC 741

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Act (difference between the contract price and the re-sale price) but they are awarded according
to the formula under the Indian Contract Act (difference between the contract price and market
price on the date of breach of contract).

2.2. Rights of an Unpaid Seller against the buyer personally


The unpaid seller can take following actions against the buyer personally:

 Sue for price

The unpaid seller has also a right to claim the price from the buyer for the goods. It has been
provided under Section 55 of SOGA. It provides that where the property in the goods have
already been delivered to buyer and seller remains unpaid owing to the negligence or deliberate
refusal of the buyer then seller may sue the buyer for the price of the goods.

Example: D sold a watch to F for Rs. 1000. F refused to pay. D can sue F for price of the watch.

 Damages for Non-Acceptance

According to Section 56 of SOGA if Buyer refuses to accept the goods and pay the price of the
goods then seller can sue him for damages for non-acceptance. The damages are calculated in
accordance with the rules con-tained in Section 73 of the Indian Contract Act, that is, the
measure of damages is the estimated loss arising directly and naturally from the buyer’s breach
of contract.

 Suit for Specific Performance

According to Section 58 of SOGA subject to Specific Relief Act, seller may also sue buyer for
specific performance of contract in case of a breach of contract and the decree passed can be
unconditional without giving the defendant the option of retaining the goods on payment of
damages.

 Suit for Interest & Special Damages

According to Section 61 of SOGA, 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.

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3. Comparison between the Rights and Duties of an Unpaid Seller
For a better and thorough understanding of other duties of seller, whether paid or unpaid here is a
comparative study of his right and duties:

RIGHT DUTIES

He is liable to make necessary


He can reserve the right of disposal of the goods until
1. 1 arrangements for the transfer of
certain conditions are fulfilled. [sec 25 (1)]
property in the goods to the buyer.

He can assume the acceptance of the goods by the buyer in


following cases:
(i) The buyer conveys his acceptance;
To ascertain and appropriate the
2. (ii) Does an act adopting the sale; or 2.
goods to the contract of sale
(iii)Retains the goods without giving a notice of rejection,
beyond the specified date (or reasonable time), in a sale on
approval. (sec 24)

To pass the title of the goods


To deliver the goods only on an application of delivery by
3. 3. absolutely and effectively to the
the buyer ( sec 35)
buyer.

Delivery of the goods can be made in installments, when Delivery of goods in accordance with
4. 4.
so agreed [Section 39 (1)] the terms of the contract (Section 31)

Ensuring that the goods supplied


Exercise of right to lien and retain possession of the goods,
5. 5. conform to the implied/express
until payment of the price is made.[Section 47 (1)]
conditions and warranties.

Exercise the right of stoppage in transit and resume To put the goods in a deliverable state
6. possession of the goods, until payment of the price (Section 6. and to deliver the goods when applied
49 clause 2 and Section 50) for by the buyer (Section 35)

To deliver the goods within the time


To resell the goods under certain and suitable specified in the contract or within a
7 7
circumstances. (Section 54) reasonable time and a reasonable
hour. [ sec 36 (2) and (4)]

To withhold delivery of the goods when the property in the


8 8 To bear all expenses of and incidental
goods has not passed to the buyer [sec 46 (2)]
to making a delivery (that is upto the

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stage of putting the goods into a
deliverable state [Section 36(5)]

To sue the buyer for price when the property in the goods
has passed to the buyer or when the price is payment on a To deliver the goods in the agreed
9 9
certain day, in terms of the contract, and the buyer fails to quantity. [Sec. 37 (1)].
make the payment (sec 55)

To deliver the goods in installments


10 only when so desired by the buyer.
[Sec 38 (1)]

To arrange for insurance of the goods


11 while they are in transmission or
custody of the carrier. [Sec. 39 (2)].

To inform the buyer in time, when the


goods are sent by a sea route, so that
12
he may get the goods insured [Sec.
39 (3) ]

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4. Conclusion
An unpaid seller in addition to these duties and liabilities has some other moral duties such as to
check for the possible reasons of non-payment and rectify them in case he finds any error on his
part. Thus, it must be understood that the unpaid seller cannot arbitrarily exercise his 3 given
rights but must also provide reasonable and appropriate opportunity to the buyer to rectify his
errors and thus ultimately fulfill the contract in a better-coordinated way.

Unpaid seller who pas possession of the goods in which the property has passed to the buyer, can
exercise the right of lien only in the following cases:

 where the goods have been sold without any stipulation of credit;
 where the goods have been sold on credit but the term of credit has expired;
 where the buyer becomes insolvent.

Further, unpaid seller loses his right of lien as per Section 49 of the Act. However, in case the
parties enter into a contractual stipulation to retain the right of lien and transfer of title upon
payment, then notwithstanding that the possession of the goods may have transferred to the
buyer, the unpaid seller would have the right of exercising lien over the goods.

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Bibliography
Primary

 Indian Contracts Act, 1872.

Secondary

 Atiyah, P.S. Contracts Promises and Law of obligations


 F Kessler, "Contracts of Adhesion—Some Thoughts About Freedom of Contract"
 MJ Horwitz, "The historical foundations of modern contract law"
 Chitty on Contracts, 27th edn., 1994 and 28th edn. 1999
 Avtar Singh, The Law of Contract (6th edn.) 1993
 Mulla's, Transfer of Property Act, (9th edn.)
 Pollock & Mulla, Indian Contract Act & Specific Relief Act
 www.indiacode.nic.in
 www.lawnotes.in
 www.netlawman.co.in
 indiankanoon.org
 www.casemine.com

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