Professional Documents
Culture Documents
Date: 12/03/2012
Amit Kanabar
Page 1
Unpaid seller: An unpaid seller is defined as the seller to whom the full price of the goods has not yet
been paid. The legal definition of Unpaid Seller is given in Section 45 of Sale of Goods Act as: The Seller of goods is deemed to be an unpaid seller (Sec. 45-1) When whole of the price has not been paid or tendered. When the bill of exchange or negotiable instrument has been received as a condition of payment and the condition on which it was received has not been fulfilled by the reason on dishonor of the instrument or otherwise.
Amit Kanabar
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Other rules to satisfy the conditions for this right are i. ii. iii. iv. The unpaid seller must be in actual possession of the goods sold. It can be exercised even If the documents of title have been delivered to the buyer. It can be exercised for the price and not for other expenses If the seller delivers some goods, it can be exercised on the remaining.
The rights of goods lien is linked with the possession of the goods and not with the title of the goods. Thus the goods must be in actual possession of the seller. It is, however not necessary that he should possess the goods as an owner. He can exercise the rights of lien, even if he possesses the goods as an agent or bailey for the buyer.
Amit Kanabar
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Termination of right of lien Sellers right of lien is terminated in following cases. i. ii. iii. iv. v. When he delivers the goods to the carrier or other bailey for transmission to the buyer When the buyer or his agent lawfully obtains the possession of the goods When seller waives his right of lien on the goods The right of lien once lost will not be restored When the buyer further sells the goods and the seller agrees
Example: A seller S sells a TV set to B and delivers it to B and since the TV set was not functioning properly, B delivered it back to S for the repairs. It was held that S can not exercise his right of lien over TV set.
The unpaid seller can not stop goods in transit in following cases. i. ii. iii. When the goods reaches the destination. While the buyer or his agent takes possession of delivery even if it is not reached destination. In case the carrier is agent of the buyer, the transit comes to an end the instance carrier receives the goods and seller can not stop the transition iv. Carriers wrongful refusal to deliver goods to the buyer.
Amit Kanabar
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Example: A sells TV set to B. A delivers the TV to the carrier to carry it to B. Later on gets news that B has become insolvent; A can stop delivery.
Duration of Transit: The duration of transit is the period between the commencement and end of transit. The transit commences from the time when the goods are delivered to the middleman (i.e. carrier), and continues till the buyer or his agent takes the delivery of the goods. The important provisions relating to duration of transit are as follows: a. Where goods are rejected by the buyer and carrier continues to have the possession of the goods, the transit does not come to an end [Section 51(4)]. b. Where the goods are delivered in parts, the seller may stop the remainder of the goods unless the delivery of the goods shows the intention to give up the possession of the whole of the goods.[Section 51(7)] c. Where the goods are delivered to a ship chartered by the buyer, then it is a question of fact in each case whether the carrier is acting independently or as an agent of the buyer. If circumstances show that the carrier is acting as an agent of the buyer, then the transit comes to an end as soon as the goods are loaded on board the ship [Section 51(5)].
Rights of Resale:
Unpaid sellers right of resale is contained in the Section 54(2) of Sale of Goods Act, which provides that if the buyer fails to pay or offer the price within a reasonable time, the unpaid seller has the right to resell the goods in following circumstances: a. Where the goods are of perishable nature. b. Where the unpaid seller has exercised his right of lien or stoppage in transit and gives a notice to buyer of his intension of resell the goods. c. Where the unpaid seller has expressly reserved his right of resale. d. Where seller gives notice to the buyer of his intension to resell and the buyer does not pay within a reasonable time, he can i. Recover loss on resale of the goods, if any ii. Retain any surplus on resale of goods, if any
Amit Kanabar
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However if the seller sells with out the notice to the buyer, he can not
a. Recover any loss of the goods, if any b. Retain any surplus on the resale of the goods, if any
Example: a) X sells vegetable to Y on credit, Y does not pay, X can resell to any other person. b) M sells 100 blankets to N and gives him one week for payment. N does not pay. M can resell those to any other person.
The damages are calculated in accordance with the rules contained in Section 73 of the Indian Contract Act, that is, the measure of damages is the estimated loss arising directly and naturally from the buyers breach of contract.
Amit Kanabar
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Where the goods have a ready market the principle applicable is that the seller may recover from the buyer damages equal to the difference between the contract price and the market price on the date of breach of contract. Thus if the difference between the contract price and market price is nil, the seller can get only nominal damages (Charter vs Sullivan).
But where the goods do not have any ready market, the measure of damages will depend upon the facts of each case.
Amit Kanabar
Page 7