Unpaid Seller.pptx

unpaid seller

1. SALES OF GOODS ACT, 1930 UNPAID SELLER Presented by: Mohit Parakh BBA Semester - I

2. DEFINITION OF UNPAID SELLER The seller of goods is deemed to be an unpaid seller : (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 dishonour of the instrument or otherwise.[Sec. 45(1)]

3. ANALYSIS OF SECTION 45 An analysis of this Section reveals that a seller is deemed to be an unpaid seller if the following conditions are satisfied : 1. When a seller sells goods to another person. 2. When the seller has not been paid or tendered whole of the price. It means , that if a part of the price still remains to be paid, seller is an unpaid seller. If price is tendered to the seller and he refuses to accept the tender, the seller is not an unpaid seller. 3. When the seller received a negotiable instrument, i.e. cheque , bill, hundi etc. in payment of the price and the same has been dishonoured . 4. When the condition of negotiable instrument has not been fulfilled by any other reason, e.g. by insolvency of the buyer. It should be noted that a seller who has obtained money decree for the price of the goods is still an unpaid seller, if the decree has not been satisfied. [Sec. 49 (2)]

4. WHO IS A SELLER? The term seller includes the following: ( i )The seller, i.e. owner of the goods himself . (ii) Any other person who is in a position of a seller. They include (a) agent of the seller to whom bill of lading has been endorsed, (b) consignor or agent who has paid the price, or directly responsible for the price, i.e. delcredere agent,

5. RIGHTS OF AN UNPAID SELLER The rights of an unpaid seller can be classified under two categories: A. Rights against the goods, and B. Rights against the buyer personally.

6. A. RIGHTS AGAINST THE GOODS : Where the property in the goods has passed to the buyer, but the seller has the following three rights against the goods sold : I. Right of lien. II. Right of stoppage of goods in transit. III. Right of resale

7. I . Right Of Lien A lien is a right to retain the possession of goods until some claim due it is satisfied. An unpaid seller has a right of lien. An unpaid seller of goods who has possession of the goods is entitled to retain possession of them until payment or tender of price. [Sec. 47 (1)] General Rules as to Lien : The right of lien of an unpaid seller is subject to the following rules: 1. The seller must be in possession of the goods sold. [Sec. 47(1 )] 2. The seller must be in actual possession of the goods. Mere endorsement of document of title or delivery of goods by attornment does not affect the possession of the seller. 3. The seller may have possession of the goods as an agent or bailee for the buyer .

8. 4. The lien can be exercised only when the goods are not sold on credit. [Sec. 47] 5. Where the goods have been sold on credit, the term of credit must have expired . [Sec. 47 ] 6 . Where the part delivery of goods does not imply that the seller has waived the lien, the seller can exercise lien on remaining goods. [Sec. 48 ] 7. The right of lien can be exercised only when the seller has not waived his right either expressly or impliedly. (Sec. 49 (1)] 8 . 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, [Sec . 49 (2 )]

9. When Lien can be Exercised ? 1 . Where the goods have been sold without any stipulation as to credit . 2 . Where the goods have been sold on credit, but the term of credit has expired. 3 . Where the buyer becomes insolvent. [Sec: 47 (1 )] Effect of part delivery : 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.

10. Termination or Loss of Lien When he delivers the goods to a carrier or the bailee : When the seller 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, he loses his right of lien onthe goods sold. [Sec. 49 (1) (a )] When the buyer obtains possession of the goods : The seller's lien is also lost when the buyer or his agent lawfully obtains possession of the goods. [Sec.19 (1) (6)]

11. (iii) When the seller waives his lien : The seller also loses his right of lien once he waives this right. [Sec. 49 (1) (a)] (iv) When sub-sale is made : When the seller himself assents to a sub-sale, or other disposition of goods made by the buyer, the seller loses his lien on the goods. Sec. 53 (1 ) (v) When documents of title are transferred to a third party : The seller also loses his lien when a buyer having lawfully obtained possession of documents of title to the goods, transfers the documents to a third party in good faith and for consideration by way of sale. [Proviso to Sec. 53 ( 1)]. (vi) When seller misleads others : When a seller leads third parties to believe that he has no lien on the goods, he losses his right of lien.

12. The right of stoppage of goods in transit means the right of an unpaid seller to stop further transit of the goods with a view to regain actual or constructive possession of the goods till the price is paid. When right to stoppage can be exercised ? Right of stoppage of goods in transit can be exercised if the following condition are satisfied If the seller is an unpaid seller . If he has parted with the possession of goods to a carrier. If the goods are in the transit . If the buyer of the goods has become insolvent . If the other provisions of this Act do not disallow. [Sec. 50] II. Right Of Stoppage Of Goods In Transit

13. Duration of Goods in Transit : The goods are deemed to be in the course of transit in the following cases 1. Until the buyer takes delivery of the goods 2 . When the buyer rejects the goods 3 . When the carrier holds goods as a carrier 4 . When part delivery does not imply delivery of the whole

14. WHEN RIGHT OF STOPPAGE IN TRANSIT IS LOST OR COMES TO AN END? The seller's right of stoppage of goods in transit comes to an end when the trade of goods comes to an end. Transit of goods comes to an end in following cases : 1. When the buyer obtains delivery at the destination 2 . When buyer obtains delivery before destination 3 . When the carrier acknowledges to the buyer 4 . When carrier wrongfully refuses to deliver 5 . When part delivery implies the delivery of the whole

15. Modes of Exercising Right of Stoppage in Transit The unpaid seller may exercise his right of stoppage in transit in any following two ways: ( i ) By taking actual possession of the goods . (ii) By giving notice of his claim to the carrier or other bailee in whose possession the goods are.

16. Basis of distinction Right of Lien Right of Stoppage in Transit Possession of goods In order to exercise lien. seller must be in possession of the goods. In order to exercise the right of stoppage in transit, the carrier or the other bailee must be in possession of goods on behalf of the seller. Nature and purpose of right Right of lien is a right to retain the goods until price due against it, is paid. Right of stoppage in transit is a right to regain possession. DISTINCTION BETWEEN RIGHT OF LIÊN AND RIGHT OF STOPPAGE IN TRANSIT - 1

17. Basis of distinction Right of Lien Right of Stoppage in Transit Availability of the right Seller gets right of lien when the buyer fails to pay. Seller gets the right of stop page in transit only when the buyer becomes insolvent. End and commencement of right Lien comes to an end when the seller delivers the goods to a carrier or bailee . Right of stoppage in transit commences when the seller delivers goods to a carrier. Exercise of right Lien can be exercised by the seller himself. This right can be exercised by the seller through the carrier or bailee of the goods. DISTINCTION BETWEEN RIGHT OF LIÊN AND RIGHT OF STOPPAGE IN TRANSIT - 2

18. Effect of Sub-sale or Pledge by Buyer : General rule is this that the unpaid seller's right of lien or stoppage in transit is not affected by any sale or other disposition (e.g. by pledge) of the goods by the buyer . But this rule is subject to two exceptions : 1 . Sale by consent of the seller : When the sub-sale or other disposition of the goods by the buyer is with the assent of the seller the seller loses his rights.[Sec. 53 (1 )] 2. Transfer of documents of title by way of sale : Sometimes, the buyer after having lawfully obtained the possession of documents of title to the goods, transfer them to any other person by way of sale. If such transferee takes the documents of title in good faith and for consideration, he gets good title to the goods covered by those documents. The unpaid seller loses all his rights . [Sec. 53 (1)1

19. 3 . Transfer of documents of title by way of pledge: Sometimes, the buyer transfers the documents of title to the goods to any other person by way of pledge. In such a case the unpaid seller can exercise his right of lien of stoppage in transit subject to the right of the pledgee. However, the seller me require the pledgee to use in first instance, other goods or securities of pledger available to him to satisfy his claim. [Sec. 53 (2)]

20. Right of stoppage in transit and right of lien are closely related to each other. When the right of lien ends, the right of stoppage in transit begins. But, when the right of stoppage in transit is exercised by the seller, the right of lien is revived. This is so because the seller regains possession of the goods when he exercises his right at stoppage in transit. Therefore, it is also said that the right of stoppage in transit is an extension of the right of lien. The Relation between Right of Stoppage in Transit and Lien

21. III. Right Of Re-sale The unpaid seller has a right to resale the goods sold by him in the following three cases : 1. Where goods are of perishable nature [Sec. 54 (2)] 2. When notice is given but the buyer does not pay[Sec.54(3)] 3. When seller expressly reserves a right of resale [Sec.54(4)]

22. Treatment of loss or profit When notice is given : [Sec . 54 (2 )] When the seller resells the goods within a reasonable period of time after notice to the buyer and there is loss to the seller, he can recover the loss from the original buyer. But the buyer shall not be entitled to any profit which may occur on resale. When the notice is not given : When goods are sold without giving notice to the buyer, the unpaid seller shall not be entitled to recover the loss caused to him an resale. In case, there is profit on sale, the buyer shall be entitled to the profit.

23. Other important provisions 1. Sale not generally rescinded by lien or stoppage in transit [Sec.54(1)] 2. Good title of the buyer even resale without notice [Sec.54(3)]

24. B. RIGHTS AGAINST THE BUYER The unpaid seller also has the rights against the buyer personally in addition to his rights against the goods. These are as under : 1 . He may sue for price. [Sec. 55 (1 )] 2 . He may sue for damages for non-acceptance of the goods. [Sec. 56] 3 . He may sue for repudiation of the contract. [Sec. 60 ] 4 . He may sue for interest on the amount of price of goods. [Sec . 61 (2) (a)]

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