Unpaid seller under the Sale of Goods Act

Unpaid seller under the Sale of Goods Act 1930 law notes, Judiciary

Unpaid seller under the Sale of Goods Act

Table of contents

  1. Introduction
  2. Unpaid seller under the Sale of Goods Act
  3. Rights of unpaid seller
  4. Duties of unpaid seller
  5. Case law
  6. Conclusion
  7. References

Introduction

The Sale of Goods Act, 1930 also deals with the rights and duties of unpaid seller as well with the rights and duties of the seller and the buyer. It is the duty of the buyer to pay the price for the goods delivered if he fails to do so, the seller remains unpaid. In this article, we are going to discuss the duties of unpaid seller under the Sale of Goods Act, 1930.

Unpaid seller under the Sale of Goods Act

Unpaid seller is the person who sold the goods but has not received the full payment for the same. Here the unpaid seller receives the half payment and half is remaining he is also unpaid seller. Under the Sale of Goods Act, 1930, an unpaid seller is a seller who has not been paid full price of the goods sold or if he has received a bill of exchange or other negotiable instrument as conditional payment, the condition for the same has not been fulfilled. An unpaid seller is defined under section 45(1) of the Sale of Goods Act, 1930.

Rights of unpaid seller

The rights of an unpaid seller are given under the Sale of Goods Act on the basis of position of the goods delivered and the performance of the seller. The rights of an unpaid seller are as following:-

  1. Right to lien:- The seller has the right to lien the goods until the fulfillment of the price of the goods. The right to lien means to retain the goods or possession of the goods. The right to lien of an unpaid seller is given under section 47 of the Sale of Goods Act 1930. According to this section, an unpaid seller can retain the possession of the goods until the payment in following cases:-
    • When goods are sold without any stipulation as to credit.
    • When goods are sold on credit but the term of credit expires.
    • When the buyer becomes insolvent.
    According to the section 49 of the Sale of Goods Act 1930, an unpaid seller loses his right to lien in the following cases:-
    • When he delivers the goods to the carrier or other bailee for the transmission to the buyer without reserving the right to disposal of the goods.
    • When the buyer lawfully obtains the possession of the goods.
    • When the seller waives the right to lien.
  2. Right to stoppage transit :- This right is the extension of the right to lien. An unpaid seller has the right to stop the goods during transit and retain until the payment. And if in any case the buyer becomes insolvent, an unpaid seller can retain the goods.
  3. Right to re-sale:- An unpaid seller has the right to re-sale the goods after retaining the goods under circumstances:-
    • Where the goods are perishable.
    • Where he gave notice of his intention to re-sale the goods and the buyer has not pay the price within the reasonable time.
    • Where he has expressly reserved the right to re-sale in case of default.
  4. Right to sue:- An unpaid seller has a right to sue the buyer for the price of goods. He can also sue for the damages to the buyer for refusing to accept the goods.

Duties of an unpaid seller

  1. Duty to deliver the goods as per the contract:- Is is the duty of an unpaid seller to deliver the goods as according to the condition mentioned in the contract. If the goods are not delivered as per the contract, he is not entitled to get full price of the goods.
  2. Duty to wait for another installment:- If there is a condition as per the contract to pay in installments, the seller has a duty to wait till the expiry of the period of installment. Without wait or before the expiry of the period of installment he can not exercise the right to lien or re-sale the goods and he is not entitled to sue for price.
  3. Duty to exercise the right to lien only when the goods are in his possession:- An unpaid seller cannot exercise the right to lien over the goods which are not in his possession. And is entitled to pass the title of the goods to the buyer on the full payment.
  4. Duty to inform the buyer on the dishonor of cheque or other negotiable instrument:- On the dishonor of the cheque or other negotiable instrument an unpaid seller has a duty to inform the buyer for the same within the reasonable time, so he can do arrangements for another cheque or negotiable instrument or arrange any other way of payment. The provision of the dishonor of the cheque is given under section 138 of the Negotiable Instruments Act.
  5. Duty to give notice of his intention of re-sale to the buyer:- An unpaid seller has a duty to give notice of his intention to re-sale the goods before reselling the same. And he is entitled to re-sale the goods only when the buyer is unable to give full price of the goods.
  6. Duty to give reasonable time before sue:- he has a duty to give reasonable time and notice to the buyer for arrange the price of the goods before sue. And has a duty to wait for the reply or response of the buyer too.
  7. Duty to give notice for stoppage of transit:- An unpaid seller has a duty to give notice to the carrier or the Bailee who is in the possession of the goods within a reasonable time. Here the term reasonable time means that there is sufficient time to communicate or understand the circumstances before the delivery of the goods. After the stoppage of the goods, the carrier or other Bailee re-delivers the goods to the seller as his directions. It is also the duty of an unpaid seller to bear the expenses of re-delivery of the goods.
  8. Duty to ensure that the goods supplied are as per the conditions and warranties:- If the goods are not same to the quantity and quality as per the contract he is not entitled to claim his right to lien or sue for damages.

Case law

Ram Saran Das Raja Ram And Anr. vs Lala Ram Chander on 5 May, 1967

Where, however, the unpaid seller, who has exercised his right of lien or stoppage in transit. Where, however, the unpaid seller, who has exercised his right of lien or stoppage in transit, gives notice to buyer of his intention to sell, the unpaid seller may, if the buyer does not within a reasonable time pay or tender the price, resell the goods within a reasonable time and recovery from the original buyer damages for any loss occasioned by his breach of contract, but the buyer is not entitled to any profit which may occur on the re-sale. In case of re-sale, pursuant to the exercise of the right of lien or stoppage in transit, the buyer acquires a good title thereto as against the original buyer notwithstanding want of notice of the resale to the latter.

Suchetan Exports P.Ltd vs Gupta Coal India Limited & Ors on 2 August, 2011
Unpaid Seller” as defined in Section 45(1)(a) of the aforesaid Act, and would be entitled only to recovery of cost of the goods supplied. It was further stipulated that the seller would thereupon transfer the rights in respect of the goods to the buyer by endorsing in favor of the buyer a set of negotiable documents and hand over the same to the latter.

M.P.V. Sundararama Iyer And … vs V.V.C.R. Murugesa Mudaliar on 11 April, 1956
The seller being entitled to delivery at any time during the delivery month, he must notify the buyer when he is prepared to glop delivery and if there Is non compliance with this notice he has the right to resell, thus treating the contract as terminated. This condition contemplates that the seller shall notify the buyer when he requires him to take delivery and the buyer must accept delivery at any time during the month. Since the buyer must take delivery in accordance with the seller’s requirements, application by, him for delivery is not contemplated. Elsewhere, the contract provides that the buyer must pay for the goods against delivery and therefore on receipt of notice from the seller he must be ready to pay the price and to take delivery in accordance with the requirements in the notice. Since these things must be one when notified by the seller, application for delivery to unnecessary and is not contemplated in the contract.

CONCLUSION

If a person sells something to the another, he is expecting some consideration for the same by that person. If he has not received anything or received half of the price of that goods he is called as an unpaid seller. The word unpaid seller is defined under section 45 of the Sale of Goods Act,1930. The rights and duties of an unpaid seller are also given under this Act. If a person enjoys the rights on a property, he is also entitled to take some responsibilities for the same. If an unpaid seller has not received the full price of the goods he can claim for the same by the buyer but before claiming he has to perform his duties towards that.

References

  1. The Sale of Goods Act, 1930
  2. The Negotiable Instruments Act
  3. www.indiankanoon.org

Also Read:

Condition and warranties on sale of goods