UNPAID SELLER An unpaid seller is one who has not been paid or tendered the whole of the price

or one who receivers a bill of exchange or other negotiable instrument 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. RIGHTS OF AN UNPAID SELLER The rights of an unpaid seller can be studied under two heads 1. when the property in the goods has passed to the buyer 2. when the property in the goods has not passed to the buyer
RIGHTS OF AN WHEN THE UNPAID SELLER PROPERTY PASS WHEN THE PROPERTY NOT PASS

1. WHEN THE

PROPERTY IN THE GOODS HAS PASSED

WHEN THE PROPERTY PASS

RIGHT OF LIEN

RIGHT OF STOPPAGE IN TRANSIT

RIGHT OF RESALE

RIGHT OF RESALE-; (Sec.54)

When the unpaid seller has exercised his right of lien on his retaining the possession of the goods or resumes possession of the goods by exercising his right of stoppage in transit upon insolvency of the buyer, he can resell the goods under the following circumstances. 1. Where the goods are of perishable nature 2. Where the seller gives notice to the buyer his intention to resell the goods and the buyer does not pay or tender the price within a reasonable time after the notice. 3. Where the seller has expressly reserved his right of resale in case the buyer makes default The seller can hold the buyer responsible for loss suffered due to breach of contract. If on resale the unpaid seller receives any profits and he has given notice to the buyer of resale the unpaid seller is entitled to retain the profits. However, when the unpaid seller has not given notice to the buyer, then he loses his right to recover damages from the buyer and also has to pay the profits to the buyer arising from resale. If however, in a resale there is loss to the seller, he can claim it from the buyer as damages for the breach of contract. No notice is necessary where the seller has expressly reserved the right of resale in case the price is not paid. The purchaser from the unpaid seller gets an absolute and good title to the goods as against the original buyer, even if the seller has failed to give notice to the buyer of his intention of resale.

Rights of unpaid seller Introduction The topic right of unpaid seller is included in sales and good act 1930. Unpaid seller means the seller who has not been paid the price for his good. But this is not the only situation when the seller is said to be unpaid there are certain specific situations as---1) He must be unpaid and price is due. 2) He must have an immediate right and action of price. 3) If he is not accepted with the money for the price of goods obtained by him.

Seller here means not only the actual seller, but also any person whose is in position of seller. E.g. an agent of seller to who has heavy paid for the goods or is directly responsible for the price.[ Sec 45(2)] Classification and right of unpaid seller: A right of an unpaid seller is broadly divided in to 2 major categories:1. Right against goods 2. Right against buyer personally. Right against the good is divided in to 2 parts 1. Where the properly in the goods has passed{ Sec 46(1)} 2. Where the property in the goods has not been passed { Sec46(2)}

Now, where the property in the goods has passed is sub-divided in to 1. 2. 3. Right of lien { Sec 47-49} Right of stoppage in transit { Sec (50-52)} Right and resale { Sec 54}

While, where the property in the goods has not passed is subdivided in to1. Right with holding in delivery 2. Right stoppage in transit. Further, Right against the buyer personally is sub-divided in to four Rights such as1. 2. 3. 4. Suit for price{ Sec 55} Suit for damages { Sec 56} Repudiation of Contact { Sec 60} Suit for interest { Sec 61}

Now lets see where the property in the goods has passed to buyer an unpaid seller has following right against goods (sec 46(1) Right of Lien {Sec 46(1) (a) and 47 to 49}

The word lien means to contain possessions of .. Under [sec 47] an unpaid seller who is in possession of goods, is entitled to obtain them in his possession until the payment of price. There are specific situation where right of seller are available to him. It is available to the in the following cases:a. b. c. Where the goods have been sold without any stipulation as to credit. The goods have been sold on credit but the term of credit has expired. The buyer become insolvent [ sec 47(1)]

Rules regarding lien:1. Lien can be exercised only for non-payment of price and not for any other charges due against the buyer. E.g. the seller cannot claim lien for godown charges for storing the goods in exercised of his lien for price. 2. The possession of goods by seller must not expressly exclude the right of lien.

3. The lien of an unpaid seller is a particular lien, it is personal right which can executed only by him and not by has assignee or his creditors. The seller may execute his lien not withstanding that He is in possession of goods as agent or bailey for buyer {sec 47(2)}. It he losses the possession of goods, he loose right of lien also. 5. The unpaid seller has made part of delivery of good. He may Execute his right on the remaining goods till he is paid for the Already delivered and the goods yet to be delivered. [ Ex party chameus ,( 1873)] However a part of goods is delivered under such circumstances as to show an agreement to waive the lien, the seller cannot retain the remained (Sec 48). Termination of lien or how unpaid seller of lien is lost? a. When the seller delivers the goods to a bailey for the purpose of transmission to the buyer, without receiving a right of disposal of goods to himself. b . The buyer or his agent lawfully obtaining possession of good as buyer. c. He waives his right of lien on the goods [sec 49(1)].He may do this either expressly or impliedly. 4.

1. Express Waiver:When the contract of sale provides in express terms that the seller shall not retain possession of the goods even if the price has not been paid, there is an express waiver of lien. 2. Implied Waiver:When the seller sells the goods on credit, or grants a fresh term of credit on the expiry of the original term of credit lien is waived until the expiry of the term of credit the lien revives on the expiry of the term of credit. Again when the seller takes a bill for the price payable at a future date, the lien is waived during the currency of the bill. The lien revives on the dishonor of the bill. CASE STUDY X sold a quantity of wheat to Y who paid the price by cheque which was dishonored upon presentation X gives a delivery order to Y, for wheat and Y resold it to Z purchases in good faith ,for consideration indorsing the delivery order to him X refuse to deliver the goods to Z on the plea of non receipt of price as a Advice Z. Ans- 1. In this case z is entitled to goods. 2. According to the definition of unpaid seller , when a bill of exchange has been received as a conditional payment and the instrument has been dishonored.. 3. The rights of an unpaid seller so not depend upon any agreement between parties they arises by implication of law. An unpaid seller is having two rights a- Right against the goods. b- Right against the buyer. 4. according to right of lien as per sec.47, it is the right of unpaid seller to retain the goods until the price is paid. 5. Right of lien can be exercised only when the seller is in possession of the goods once the possession is lost, the lien is also lost. 6. Hence, in the present case x can recover the price from y but he cant recover the goods from z that purchased it from (y) in goods faith.

References Book: N.D. Kapoor.