RIGHTS OF AN UNPAID SELLER UNDER SALE OF GOODS ACT

This article has discussed about the Rights of an Unpaid Seller under Sale of Goods Act

 

1. INTRODUCTION

 

According to Indian Contract Act Section 2(f), "under the contract of sale by them," "the seller shall transfer the goods sold, and the buyer shall pay the required amount in return." It is referred to as a reciprocal promise. To put it another way, a contract for the sale of goods always includes reciprocal promises because every set of promises made serves as the consideration or a component of the consideration for the other party.

 

2. UNPAID SELLER:

 

Section 45 of Sale of Goods Act, 1930 defines that,

 

“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 dishonor of the instrument or otherwise”.

 

An unpaid seller is a person to whom the whole of the has not been paid or tendered, if the price was paid through a bill of exchange or another negotiable instrument, the same has been dishonored. If the negotiable instrument had been received as a conditional payment, i.e., subject to the realization thereof, and the condition payment, and the condition cannot be fulfilled if the same has been dishonored, the seller is deemed to be an Unpaid Seller. If the payment rather than a conditional one the seller is not an unpaid seller even though the negotiable instrument is subsequently dishonored.

 

3. RIGHTS OF AN UNPAID SELLER

 

It has already been observed that the seller and the buyer are bound to perform certain duties. Broadly speaking, the seller’s duty is to deliver the goods and the buyer’s duty is to accept and pay for them, in accordance with the contract. If either party does not perform his duty in proper way, he can be made liable. In case the buyer does not accept to pay for the goods, the unpaid seller, apart from having a right to avoid the contract or having a right to sue the buyer for the breach of contract.

 

Section 46 of the Sale of Goods Act 1930, states about the rights of an unpaid seller. This can be of two types:

 

• a)   Against the goods; and
• b)   Against the buyer

 

A) RIGHT AGAINST THE GOODS 

 

The right of an Unpaid Seller against the goods are as follows;

 

• Ø  Right to a lien i.e., the seller is entitled to possession of the goods.

• Ø  Right to stoppage in transit i.e., the seller has the right to stop delivery of the goods while it is being transported by calling the carrier and instructing them not to do so.

• Ø  Right to re-sale i.e., the seller has the right to resell the goods as long as he is in possession of them.

• Ø  And for the agreement that is made for sale, rights like the right to lien, the right to stoppage in transit, and the right to resale are also applicable.

 

B) RIGHTS AGAINST THE BUYER

 

The right of an Unpaid Seller against the buyer are as follows;

 

• Ø  If the seller has already sold the goods and the buyer has not paid the price, the seller has the right to sue the buyer for the amount.

• Ø  The seller has the right to sue for damages. For instance, if the seller sends a carrier for delivery but the buyer isn't at home to accept it, and the carrier returns the goods to the seller, the seller may sue the buyer for damages related to packing the goods, transportation costs, and other expenses.

• Ø  If the buyer doesn't pay the seller the price of the goods after delivery within the allotted time period as stated in the contract, the seller may file a lawsuit against the buyer for interest.

 

4. CONCLUSION

 

At the end of this article, we can conclude the same with stating that, when the buyer fails to honor the maturity of any bills of exchange or other negotiable instruments accepted by the seller as a condition precedent, the seller either hasn't been paid in full or hasn't been paid at all. If the seller had used his right of lien or stoppage in transit, he could resell the goods in this scenario after giving the buyer notice, and the new buyer would have good title to the goods. In this situation, the seller has the right to file a lien against the buyer for failing to pay the required sum. The buyer may, however, sue the seller for non-performance and seek damages or specific performance if the seller fails to deliver the goods.