Unpaid Seller and His Rights

Unpaid Seller and His Rights
Law

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NAME – ADITYA JHUNJHUNWALA
ROLL NO. – 17001
COURSE – PGDM
TERM – 2

















Prof. CS DR. SANTANU MITRA

November 2017

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ACKNOWLEDGEMENT



On the very outset of this report, I would like to extend my sincere and heartfelt
obligation towards all the personages who have helped me in this endeavour.
Without their active guidance, help and cooperation & encouragement, I would
not have made headway in the project.

I am ineffably indebted to our Principal Dr. Tamal Dutta Choudhuri for
conscientious guidance and encouragement to accomplish this assignment. I
am extremely thankful and pay gratitude to our Faculty Prof. CS. Dr Santanu
Mitra for his valuable guidance and support on accomplishment of his project. I
extend my gratitude to Calcutta business school for giving me the opportunity. I
also acknowledge with a deep sense of reverence, gratitude towards my Parents
who has supported me morally as well as economically. Last but not the least,
gratitude goes to all of my friends who directly or indirectly helped me a lot to
complete this project report.




Thanking You,
Aditya Jhunjhunwala
Place – Kolkata
Data – 10 November 2017

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TABLE OF CONTENTS



SL No. PARTICULARS Pg. No.



1 INTRODUCTION 4
2 RIGHTS OF UNPAID SELLER 5
3 UNPAID SELLER RIGHTS AGAINST GOODS 6 – 10
4 UNPAID SELLER RIGHTS AGAINST BUYER 11
5 CONCLUSION 12
6 BIBLIOGRAPHY 13

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INTRODUCTION


"Unpaid seller" defined as

(1) The seller of goods is deemed to be an "unpaid seller" within the meaning
of this Act.-

(a) Who has not been paid or tendered the whole of the price of
the goods sold, or

(b) Who had received a bill of exchange or other negotiable
instrument has as a conditional payment, and the condition
on which it was received has not been fulfilled because of the
dishonour of the instrument or otherwise.



(2) In this Chapter, the term "seller" includes any person who is in the
position of a seller, as, for instance, an agent of the seller to whom the
bill of lading has been endorsed, or a consignor or agent who has himself
paid, or is directly responsible for, the price.


Example: A purchased some goods in his personal name on behalf of his
principal B. B refuses to pay the price of the goods. Since A has incurred
personal liability, the relationship between him and his principal will be
taken as that of a seller and a buyer. A will be taken as unpaid seller
under the provision of Sec. 45.

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RIGHTS OF UNPAID SELLER









The unpaid seller has two types of rights under the Sale of Goods act. This includes
the seller’s right against the goods and the seller’s right against the buyer personally.

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UNPAID SELLER’S RIGHTS AGAINST THE GOODS
U/SEC. 46


UNPAID SELLER'S RIGHTS

Subject to the provisions of this Act and of any law for the time being in force,
notwithstanding that the property in the goods may have passed to the buyer, the
unpaid seller of goods, as such, has by implication of law lien on the goods for
the price while he is in possession of them; in case of the insolvency of the
buyer a right of stopping the goods in transit after he has parted with the
possession of them; a right of re-sale as limited by this Act. Where the property
in goods has not passed to the buyer, the unpaid seller has, in addition to his
other remedies, a right of withholding delivery similar to and co-extensive with
his rights of lien and stoppage in transit where the property has passed to the
buyer.

(I) when the property in the goods has been transferred:
i) Right of Lien
ii) Right of stoppage of goods in transit
iii) Right of resale


(II) When the property in the goods has not been transferred:

Right of withholding delivery: if the property in the goods has not
passed to the buyer, the unpaid seller cannot exercise right of lien,
but gets a right of withholding the delivery of goods, similar to and
co-extensive with lien.








i) RIGHT OF LIEN [SEC. 46(1) (A) AND 47 TO 49]

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A lien is a right to retain possession of goods until payment of the price.


Rules regarding lien
Subject to the provisions of this Act, the unpaid seller of goods who is in
possession of them is entitled to retain possession of them until payment or
tender of the price in the following cases, namely:-

a) Where the goods have been sold without any stipulation as to credit;
b) Where the goods have been sold on credit, but the term of credit has expired;
c) Where the buyer becomes insolvent.

The seller may exercise his right of lien notwithstanding that he is in possession
of the goods as agent or Bailee for the buyer. Where an unpaid seller has made
part delivery of the goods, he may exercise his right of lien on the remainder,
unless such part delivery has been made under such circumstances as to show an
agreement to waive the lien.

Termination of lien
The unpaid seller of goods loses his lien thereon
A) When he delivers the goods to a carrier or other Bailee for the purpose of
transmission to the buyer without reserving the right of disposal of the goods;
B) When the buyer or his agent lawfully obtains possession of the goods; by
waiver thereof.
C) When the seller expressly or implied waives his rights of lien. The unpaid
seller of goods, having a lien thereon, does not lose his lien by reason only that
he has obtained a decree for the price of the goods.











ii) RIGHT OF STOPPAGE IN TRANSIT [SEC. 50 TO 52]

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Subject to the provisions of this Act, when the buyer of goods becomes
insolvent, the unpaid seller who has parted with the possession of the goods has
the right of stopping them in transit, that is to say, he may resume possession of
the goods as long as they are in the course of transit, and may retain them until
payment or tender of the price. An unpaid seller can exercise right of stoppage
of goods in transit when each of the following conditions are satisfied:

i) Seller had parted with the possession of the goods.
ii) Goods are in the course of transmission to the buyer.
iii) The buyer of the goods has become insolvent.



DURATION OF TRANSIT
Goods are deemed to be in course of transit from the time when they are
delivered to a carrier or other bailee for the purpose of transmission to the buyer,
until the buyer or his agent in that behalf takes delivery of them from such
carrier or other bailee. Following are the cases where transit is presumed to be
an end the seller’s right of stopping the goods in transit terminates:


i) If the buyer or his agent in that behalf obtains delivery of the goods
before their arrival at the appointed destination, the transit is at an end.

ii) If, after the arrival of the goods at the appointed destination, the carrier
or other Bailee acknowledges to the buyer or his agent that he holds the
goods on his behalf and continues in possession of them as bailee for
the buyer or his agent, the transit is at an end and it is immaterial that a
further destination for the goods may have been indicated by the buyer.

iii) If the goods are rejected by the buyer and the carrier or other bailee
continues in possession of them, the transit is not deemed to be at an
end, even if the seller has refused to receive them back.

iv) Where the carrier or other bailee wrongfully refuses to deliver the goods
to the buyer or his agent in that behalf, the transit is deemed to be at an
end.

v) Where part delivery of the goods has been made to the buyer or his
agent in that behalf, the remainder of the goods may be stopped in

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transit, unless such part delivery has been given in such circumstances
as to show an agreement to give up possession of the whole of the
goods.



HOW STOPPAGE IN TRANSIT IS EFFECTED

There are two modes of effecting stoppages of the delivery of the goods to the
buyer, which are in the course of transmission:
a) By the seller taking actual possession of the goods, or
b) By the seller giving notice of his claim to the carrier or other bailee who has
the actual possession over the goods.

Where the goods are in the actual possession of a person (servant or agent) other
than the principal carrier, notice to be effective must be given at such time and
under such circumstances that the principal or the employer, by the exercise of
reasonable diligence may communicate it to his servant or agent in time to
prevent the delivery of the goods to the buyer.


EFFECT OF SUB-SALE OR PLEDGE BY BUYER [SEC. 53]

(1) Subject to the provisions of this Act, the unpaid seller's right of lien or
stoppage in transit is not affected by any sale or other disposition of the
goods which the buyer may have made, unless the seller has assented
thereto: Provided that where a document of title to goods has been
issued or lawfully transferred to any person as buyer or owner of the
goods, and that person transfers the documents to a person who takes
the documents in good faith and for consideration, then, if such last
mentioned transfer was by way of sale, the unpaid seller's right of lien
or stoppage in transit is defeated.

(2) Where the transfer is by way of pledge, the unpaid seller may require
the pledge to have the amount secured by the pledge satisfied in the first
instance, as far as possible, out of any other goods or securities of the
buyer in the hands of the pledgee and available against the buyer.


iii) RIGHT OF RESALE [SEC. 54]

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An unpaid seller who has the possession of goods can resell them under the
following circumstances:

(a) When the goods are of perishable in nature: goods are perishable in
nature though has not been defined in the Act, but it means perishable
not only physically but also commercially.

(b) When he gives notice of his intension to resell: the unpaid may give
notice to the buyer of his intension to re-sell the goods and the buyer
does not within a reasonable time pay or tender the price.

(C) When he expressly reserves the right of resale: where the seller
expressly reserves right of resale in case the buyer should make default,
the seller may resell the goods in the event of such a default.

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UNPAID SELLER’S RIGHTS AGAINST BUYER
PERSONALLY




These are the rights, which an unpaid seller may enforce against the buyer
personally. These rights of the seller against the buyer are called rights in
personam and are in addition to his rights against the goods. The rights in
personam are as follows:

1) Suit for price: (sec. 55).
(a) Where property has passed: where under a contract of sale the
property in the goods has passed to the buyer and the buyer wrongfully
neglects or refuses to pay for the goods, the seller may sue him for the
price of the goods [Sec. 55 (1)].

(b) Where property has not been passed: where under a contract of sale
the price is, payable on a certain day irrespective of delivery and the buyer
wrongfully neglects or refuses to pay such price; the seller may sue him
for the price. It makes no difference even if the property in the goods has
not passed and have not been appropriated to the contract [Sec. 55 (2)].

2) Suit for damages for non-acceptance (Sec. 56).
Where the buyer wrongfully neglects or refuses to pay for the goods, the
seller may sue him for the price of the goods.

3) Repudiation of contract before due date (Sec. 60)
Where the buyer repudiates the contract before the date of delivery, the
seller may either treat the contract as subsisting and wait till the date of
delivery or he may treat the contract as rescinded and sue for damages for
the breach. This rule is known as “the rule of anticipatory breach of
contract”.

4) Suit for interest [Sec. 61 (2) (a)].
Where there is a specific agreement between the seller and the buyer as to
interest on the price of the goods from the date on which payment becomes
due, the seller may charge interest on the price when it becomes due from
such day as he may notify to the buyer.

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CONCLUSION



When delivery is made by the seller, and acceptance is made by the buyer,
the contract of sale is complete in so far as executing the sale is concerned, but
there may be nevertheless, outstanding rights in either party. The right to
enforce payment by the seller, where payment was not a condition precedent to
passing the title, and the right in the buyer to hold the seller for delay in
delivering the goods, where there is no express waiver of damage shown by the
buyer, or where the circumstances of acceptance do not show an intention to
waive damages of delay by accepting the goods. An acceptance under
compulsion, would not thereby waive damages suffered because of delay.
Acceptance of the goods does not ordinarily conclude the buyer, as to
a warranty made in reference to the goods, but if by the terms of the contract of
sale acceptance is to conclude the buyer on this point, the contract governs. The
contract may also properly provide that notice be given to the seller of any
defects in the goods sold, within a reasonable time and the effect of the retention
of the goods beyond that time, without notice or complaint, would be to deprive
the purchaser of relief.

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BIBLIOGRAPHY


 Mercantile Laws by P.C Tulsain

 http://www.jandkicai.org/pdf/16821UnpaidSeller.pdf

 http://law.uok.edu.in/Files/5ce6c765-c013-446c-b6ac-/Custom/unpaid_seller_and_his_rights.pdf

 http://www.icaiknowledgegateway.org/littledms/folder1/chapter-2-sale-of-goods-act-basics.pdf

 https://www.casrilanka.com/casl/images/stories/EDBA/sale%20of%20goods%20-%203.pdf

 https://www.slideshare.net/amangupta341/unpaid-seller