Unpaid Seller

An Unpaid Seller (Section 45) is one who has not been paid the whole price, or where a negotiable instrument (cheque/bill) has been conditionally received and dishonoured.

Rights Against Goods:

1. Right of Lien (Sec 47-49): Retain possession until payment (even if acting as agent of buyer)
2. Right of Stoppage in Transit (Sec 50-52): Stop goods while in transit if buyer becomes insolvent
3. Right of Re-sale (Sec 54): Sell goods after giving notice if goods are perishable or buyer doesn't pay within reasonable time

Rights Against Buyer Personally:

1. Suit for price (Section 55)
2. Suit for damages for non-acceptance (Section 56)
3. Suit for special damages and interest (Section 61)

Yes, according to Section 45(2) of the Sale of Goods Act, 1930, the term 'seller' includes any person who is in the position of a seller. This means 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, can also be considered an unpaid seller and exercise the corresponding rights.

An unpaid seller has two main categories of rights: (1) Rights against the goods, which can be exercised even if the property in the goods has passed to the buyer, and (2) Rights against the buyer personally, which are contractual remedies.

Goods are deemed to be no longer in transit in several situations, including: (a) when the buyer or their agent obtains delivery of the goods before their arrival at the appointed destination, (b) if, after the arrival of the goods at the appointed destination, the carrier or other bailee acknowledges to the buyer or their agent that they hold the goods on their behalf, (c) if the carrier wrongfully refuses to deliver the goods to the buyer or their agent, or (d) if part delivery has been made and the remainder is intended to be delivered.

An unpaid seller can sue the buyer for the price in two main situations: (a) 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, or (b) 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. In both cases, the seller may sue for the price of the goods.

Generally, a sub-sale or other disposition of the goods by the buyer does not affect the unpaid seller's rights of lien or stoppage in transit. However, there are exceptions: (a) if the seller has assented to the sub-sale or other disposition, or (b) if a document of title to goods (like a bill of lading) has been lawfully transferred to any person as buyer or owner, and that person transfers it to another person who takes it in good faith and for consideration. In such cases, the unpaid seller's rights may be defeated.

The key difference lies in the possession of goods. The right of lien can only be exercised when the goods are in the actual possession of the seller. In contrast, the right of stoppage in transit can be exercised only when the seller has parted with possession, and the goods are with a carrier for transmission to the buyer, but the buyer has not yet taken delivery. Lien is about retaining possession, while stoppage in transit is about regaining possession.

The right of lien is the right of an unpaid seller to retain possession of the goods until the full price is paid. This right can be exercised when: (a) the goods have been sold without any stipulation as to credit, (b) the goods have been sold on credit, but the term of credit has expired, or (c) the buyer becomes insolvent. This right is available only when the seller is in actual possession of the goods.

If an unpaid seller resells the goods under their right of resale: (a) they can recover from the original buyer damages for any loss occasioned by their breach of contract, and (b) if they make a profit on the resale, the original buyer is not entitled to that profit. If no notice of resale was given (except for perishable goods), the seller cannot claim damages for loss.

Where an unpaid seller has made part delivery of the goods, they may exercise their right of lien or stoppage in transit on the remainder, unless such part delivery has been made under such circumstances as to show an agreement to waive the lien or right of stoppage in transit.

The 'right of stoppage in transit' is the right of an unpaid seller to stop the goods while they are in the course of transit, resume possession of them, and retain them until payment or tender of the price. This right can only be exercised when the buyer becomes insolvent and the goods are still in transit.

Under Section 45(1) of the Sale of Goods Act, 1930, a seller is deemed to be an 'unpaid seller' in two primary situations: firstly, when the whole of the price has not been paid or tendered; and secondly, 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.

If the buyer wrongfully neglects or refuses to accept and pay for the goods, the unpaid seller may sue them for damages for non-acceptance. The measure of damages is generally the estimated loss directly and naturally resulting, in the ordinary course of events, from the buyer's breach of contract. If there is an available market for the goods, the damages are ascertained by the difference between the contract price and the market or current price at the time of refusal to accept.

An unpaid seller loses their right of lien in the following circumstances: (a) when they deliver the goods to a carrier or other bailee for transmission to the buyer without reserving the right of disposal, (b) when the buyer or their agent lawfully obtains possession of the goods, or (c) by waiver thereof. The lien is also lost when the price is paid or tendered.

An unpaid seller can exercise the right of resale in the following cases: (a) where the goods are of a perishable nature, (b) where the seller gives notice to the buyer of their intention to resell, and the buyer does not pay or tender the price within a reasonable time, or (c) where the seller expressly reserves a right of resale in case the buyer should make default.