RIGHTS OF UNPAID SELLER
BUSINESS LAW/COMMERCIAL LAW
LAW OF SALE OF GOODS
MEANING OF UNPAID SELLER
SECTION 45 DEFINES THAT A SELLER IS UNPAID:-
1.
WHEN THE WHOLE OF THE PRICE HAS NOT BEEN PAID OR TENDERED
2.
WHEN A NEGOTIABLE INSTRUMENT OR A BILL OF EXCHANGE HAS BEEN RECEIVED AS
CONDITIONAL PAYMENT AND THE CONDITION ON WHICH IT HAS NOT RECEIVED BEEN
FULFILLED BY REASON OF THE DISHONOR OF THE INSTRUMENT OR OTHERWISE.
RIGHTS OF UNPAID SELLER CAN BE EXERCISED BY
AGENT OR A CONSIGNOR
RIGHTS OF UNPAID SELLER
AGAINST THE GOODS
WHEN THE PROPERTY IN THE GOODS HAS PASSED:-
1.
RIGHT OF LIEN
2.
RIGHT OF STOPPAGE OF GOODS
3.
RIGHT OF RESALE
WHEN PROPERTY IN THE GOODS HAS NOT PASSED:-
A.
RIGHT OF WITHHOLDING THE DELIVERY
AGAINST THE BUYER
1.
RIGHT TO SUE FOR PRICE
2.
RIGHT TO SUE FOR DAMAGES
3.
RIGHT TO SUE FOR INTEREST
RIGHT OF UNPAID SELLER AGAINST THE GOODS
RIGHT OF LIEN ( SEC 47-49)
LIEN IS THE RIGHT TO RETAIN POSSESSION OF GOODS UNTIL PAYMENT IN RESPECT OF THEM IS PAID.
1.
WHERE THE GOODS HAVE BEEN SOLD WITHOUT ANY STIPULATION TO CREDIT
2.
BUT THE TERMS OF CREDIT HAS EXPIRED
3.
WHERE THE BUYER BECOMES INSOLVENT
RIGHT OF LIEN
1.
IS LINKED WITH POSSESSION NOT WITH TITLE
2.
IS INDIVISIBLE IN NATURE
CASE STUDY
EXAMPLE: A SELLS TO B A CERTAIN QUANTITY OF
SUGAR. IT IS AGREED THAT THREE MONTH CREDIT SHALL BE GIVEN. B KEEP THE SUGAR TO
REMAIN IN A’S WAREHOUSE TILL THE EXPIRY OF THREE MONTH AND THEN DOES NOT PAY
FOR THEM. A MAY RETAIN THE GOODS FOR THE PRICE.
BHARUCHA V WADIHAH,”
A SOLD CERTAIN SHARES TO B. THE RELATIVE SHARE
CERTIFICATE AND TRANSFER FORM DULY SIGNED WERE HANDED OVER TO THE BUYER AGAINTS
CHEQE FROM THE BUYER.THE BUYER BECAME INSOLVENT. HELD THAT THERE WAS NO LIEN
AS POSSESSION HAS BEEN GIVEN TO THE BUYER.
TERMINATION OF LIEN ( SEC 49)
BY DELIVERY TO CARRIER:- DELIVERY OF THE GOODS TO A
CARRIER FOR THE PURPOSE OF TRANSMISSION TO THE BUYER OPERATES AS A DELIVERY TO
THE BUYER HIMSELF ND THEREFORE THE RIGHT OF LIEN IS LOST BUT THE SELLER HAS A
RIGHT OF STOPPAGE IN TRANSIT.
VALPY VS GIBSON,” THE GOODS SOLD WERE DELIVERED
TO THE BUYER’S SHIPPING AGENT AND GOODS WERE RETURNED TO THE SELLER FOR
REPACKING DURING SUCH PACKING THE BUYER BECAME INSOLVENT AND AS THE SELLER
BEING UNPAID CLAIMED TO RETAINED THE GOODS BUT IT WAS HELD HE HAD LOST THE
POSSESSION OF THE GOODS BY DELIVERY TO THE SHIPPING AGENTS.
RIGHT OF STOPPAGE ( SEC 50-52)
THE RIGHT TO STOPPAGE MEANS THE RIGHT TO STOP
FURTHER TRANSIT OF THE GOODS TO RESUME POSSESSION
1.
THE SELLER MUST BE UNPAID
2.
HAVE PARTED WITH THE POSSESSION OF THE GOODS AND THE BUYER MUST NOT HAVE
ACQUIRED IT
3.
THE BUYER MUST BE INSOLVENT
4.
THE PROPERTY MUST HAVE PASSED FROM THE SELLER TO THE BUYER
5.
ONLY AVAILABLE WHEN THE GOODS ARE NEITHER IN POSSESSION OF THE SELLER NOR
THAT OF BUYER BUT ARE IN THE POSSESSION OF A MIDDLEMAN FOR THE PURPOSE OF
TRANSMISSION TO THE BUYER
CASE STUDY
BATHELL V CLARK
B WHO PURCHASED GOODS FROM M/S CLARK OF
GLASGLOW,INSTRUCTED THE SELLER TO SEND THE GOODS BY A CERTAIN SHIP TO MELBOUNE.
GOODS WERE RAILED TO LONDON AND THEN SHIPPED TO MELBOURNE,A MATE’S RECEIPT
BEING SENT TO BUYERS. ON B BECOMING INSOLVENT THE SELLER GAVE NOTICE TO THE
RAIL CO TO STOP DELIVERY TO BUYER BUT IT WAS TOO LATE. THEN THEY GIVE FRESH
NOTICE TO THE SHOP OWNERS CLAIMING BACK THE GOODS BEFORE THE SHIP ARRIVED. RECEIVER DEMANDED THE BILL OF LADING FROM THE MASTER. HELD THE GOODS HAVING BEEN EFFECTIVELY STOPPED IN TRANSIT.
EXERCISING OF RIGHT OF STOPPAGE IN TRANSIT
1.
BY ACTUALLY TAKING POSSESSION OF THE GOODS (PERSON WHO IS HAVING POSSESSION
OR TO THE PRINCIPAL)
2.
BY GIVING NOTICE OF HIS CLAIM TO CARRIER OR OTHER BAILEE IN WHOSE POSSESSION
THE GOODS ARE
3.
GOODS WILL BE REDELIVERED ACCORDING TO THE INSTRUCTION OF THE SELLER
4.
EXPENSES OF SUCH RE DELIVERY WILL BE BORNE BY THE SELLER
RIGHT OF RESALE( SEC 54)
1.
GOODS ARE OF PERISHABLE NATURE
2.
EXERCISED THE RIGHT OF LIEN/RIGHT OF STOPPAGE IN TRANSIT,CAN GIVE NOTICE OF
HIS INTENTION TO RESELL
3.
SELLER HAS EXPRESSLY RESERVED THE RIGHT OF RESALE IN CASE OF DEFAULT BY
BUYER
RIGHT OF WITHHOLDING DELIVERY
1.
PROPERTY IN THE GOODS HAS NOT PASSED TO THE BUYER
2.
THE UNPAID SELLER HAS IN ADDITION TO OTHER REMEDIES AGAINST THE BUYER
PERSONALLY
3.
A RIGHT OF WITHHOLDING DELIVERY TO THE BUYER
RIGHT OF UNPAID SELLER AGAINST THE BUYER
PERSONALLY
SUIT FOR PRICE(SEC55)
SUIT FOR DAMAGES FOR NON ACCEPTANCE:-
1.
IF AVAILABLE MARKET FOR THE MENTIONED GOODS,THE MEASURE OF DAMAGES IS THE
DIFFERENCE BETWEEN THE CONTRACT PRICE AND THE MARKET PRICE AT THE DATE OF
BREACH
2.
NO SUCH MARKET,THEN LOSS IS ESTIMATED
CONSEQUENCES OF BREACH OF THE CONTRACT FOR SALE
SELLER’S REMEDIES
1.
SUIT FOR PRICE
2.
SUIT FOR DAMAGES
3.
SUIT FOR INTEREST
SUIT FOR REPUDIATION OF THE CONTRACT:-
1.
TREATMENT OF CANCELLATION OF THE CONTRACT
2.
MAY WAIT TILL MATURITY
BUYER’S REMEDIES
1.
SUIT FOR DAMAGES FOR NON DELIVERY OF
GOODS
2.
SUIT FOR SPECIFIC PERFORMANCE IN
3.
SUIT FOR THE BREACH OF WARRANTY
4.
SUIT FOR THE REPUDIATION OF THE CONTRACT
5.
SUIT FOR INTEREST
BUYER’S REMEDIES
1.
SUIT FOR DAMAGES FOR NON DELIVERY OF GOODS:IF
GOODS ARE READILY AVAILABLE IN THE MARKET,DAMAGES EQUAL TO THE DIFFERENCE
BETWEEN THE CONTRACT PRICE AND THE MARKET PRICE ON THE DAY OF BREACH.
2.
IN CASE OF NO READY MARKET THEN DAMAGES ON THE FACTS OF THE CASE
3.
SUIT FOR SPECIFIC PERFORMANCE ( SEC 58): APPLICABLE WHEN GOODS ARE SPECIFIC OR ASCERTAINED AND WHERE THE COMPENSATION IN MONEY WOULD NOT GIVE THE BUYER
ADEQUATE RELIEF.
4.
SUIT FOR THE BREACH OF WARRANTY ( SEC 59):-DIMINUTION OR EXTINCTION OF THE
PRICE OR DAMAGES FOR THE BREACH OF WARRANTY
REPUDIATION OF THE CONTRACT BEFORE DUE DATE (
SECTION 60)
1.
TREATMENT OF CANCELLATION OF THE CONTRACT
2.
MAY WAIT TILL MATURITY
SUIT FOR INTEREST( SECTION 61):-
INTEREST WILL RUN FROM THE DATE ON WHICH THE
PAYMENT IS MADE BUT BUYER CAN ONLY RECOVER INTEREST WHEN HE IS ENTITLED TO
RECOVER THE PURCHASE PRICE.
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