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Seller’s Remedies against Buyer

There are two types of remedies which the seller has against the
buyer. They are:

 Suit for Price: Section 55 of the Sale of Goods Act states two
conditions. The first is that when any goods are passed to the buyer
under the contract to a sale, and the buyer intentionally neglects
payment or refuses to pay for the goods according to the terms
stated in the contract, the seller may sue the buyer for the payment
of the price of the goods. The second provision states that when
payment is due on a particular day, irrespective of whether or not it
has been delivered or not, and the buyer is neglecting the payment
or refusing to pay for the good, the seller may sue the buyer to
recover the price of the goods. In the case the buyer is required to
pay the seller partly in kind and partly in cash, if either of the
payment is not given to the seller, then he has the right to sue the
buyer.
 Damage for Non-Acceptance: Section 56 of the Act states that
when the buyer is intentionally and wrongfully refusing to accept
the goods and pay for the same, the seller may sue the buyer for
non-acceptance of goods. The damage is to be calculated on the
basis of the principle which has been given under Section 73 and 74
of the Indian Contract Act, 1872.[2] Section 73 of the Contracts
Act states that when any breach of contract happens, the party who
suffers any loss can recover the amount from the person who
breached the contract. The damage which can be recovered is the
loss which would have occurred in the usual course and about which
the parties knew when the agreed to enter into a contract. When the
loss is calculated, the means which existed to remedy the breach
will also be considered. The market price of the goods regarding
which breach has been done will be ascertained on the basis of the
date on which the good was to be delivered. For instance, X and Y
entered into a contract for the sale of wheat. X had to deliver 100
bags of wheat to Y on 15th of the month. Y refused to take delivery
on 15thand on that day the price of one bag was Rs 5, 000. A suit
was filed by X for non-acceptance on 20th of the month and on that
day the market price for a bag of wheat was Rs 4,500. For the
purpose of the suit, the market price will be considered as Rs 5,000.
Following the principle enshrined in Section 55 and Section 63 of
the Contracts Act. When a date or time is fixed for the
performance of the contract, but due to any reason, some other date
is set, that substituted date will be considered for calculating the
damage caused. When the seller is required to deliver the goods in
installments, and the buyer rejects any one of the installments, the
date on which the installment was to be delivered will be considered
for determining the damage.
Buyer's Remedies against Seller for Breach of Contract
A buyer also has certain remedies against the seller who commits a
breach. These are:
1. Suit for Damages for Non-Delivery- When the seller wrongfully
neglects or refuses to deliver the goods to the buyer, the buyer may
sue the seller for damages for non-delivery. This is in addition to the
buyer's right to recover the price, if already paid, in case of non-
delivery.
2. Suit for price- Where the buyer has paid the price and the goods
are not delivered to him, he can recover the amount paid.
3. Suit for specific performance- When the goods are specific or
ascertained a buyer may sue the seller for specific performance of
the contract and compel him to deliver the same goods. The court
orders for specific performance only when the goods are specific or
ascertained and an order for damages would not be an adequate
remedy. Specific performance is generally allowed where the goods
are of special significance or value e.g. a rare paining, a unique
piece of jewellery, etc.
4. Suit for Breach of Warranty- Where there is a breach of
warranty by the seller, or where the buyer elects or is compelled to
treat the breach of condition as breach of warranty, the buyer cannot
reject the goods. The buyer may, (a) set up the breach of warranty in
extinction or diminution of the price payable by him, or (b) sue the
seller for damages for breach of warranty.
5. Suit for Damages for Repudiation of contract before Due
date-Where the seller repudiates the contract before the date of
delivery, the buyer may adopt any of the following two courses of
action --
A.He may treat the contract as rescinded and sue the seller for
damages. This is also known as 'damages for anticipatory breach'.
The damages will be assessed according to the prices prevailing on
the date of breach.
B. He may treat the contract as subsisting and wait till the date of
delivery. The contract remains open at the risk and for the benefit of
both the parties. If the seller subsequently chooses to perform there
shall be no damages otherwise he shall be liable to damages
assessed according to the prices on the day stipulated for delivery.
6. Suit for interest- The buyer may recover such interest or special
damages, as may be recoverable bylaw. He may also recover the
money paid where the consideration for the payment of it has failed.
In the absence of a contract to the contrary, the court may award
interest, to the buyer, in a suit by him for the refund of the price in a
case of a breach on the part of the seller, at such rate as it thinks fit
on the amount of the price from the date on which the payment was
made.

Remedies available to both Seller and Buyer


The buyer and seller have two remedies while dealing with goods
under the Sale of Goods Act. These are:

1. Suit for Repudiation of Contract before the Date or


Anticipatory Breach: Section 60 of the Act states that if any party
renounces the contract before the delivery of the goods, the other
party may wait till the date of delivery of the goods or may treat the
contract as annulled and claim for damages. This provision is not a
part of the English Law on which the Indian Law is based. The party
not in default can choose to keep the contract alive by not accepting
the repudiation of the defaulting party. In such a scenario, if at the
time of performance of the contract, he refuses to perform his part
or is unable to perform his part, the defaulter party would be
discharged, and the position will be as it would have been as if there
was no repudiation of the contract before the date of the contract.
For example, P is a seller and Q is a buyer. Q repudiates the
contract before date, but P does not accept the repudiation and
keeps the contract alive. On the date of performance, P delivers the
products. But these are not according to the specification of Q. in
this case Q may reject the goods. P will not be able to avail any
remedy. Or Q may accept the goods and treat the breach of
condition as a breach of warranty and recover damages from P.

2. Interest by way of Damages and Special Damages:Section 62 of


the Act states that the buyer or seller can recover special damages
where by law special damages or interest may be recoverable. There
is a limitation to this remedy. The parties should have contemplated
that a particular loss may occur if the contract is breached in any
manner. And also, the particular loss must have taken place after the
violation of the contract. The Interest Act,[7] which was
introduced in 1839, states that interest also shall be paid by way of
damages in certain cases. The point which is to be noted here that
the seller can only claim interest when he is entitled to recover the
price. When the seller is suing only for damages for breach of
contract, he cannot claim any interest. The same principle applies in
the case of the buyer also. He cannot claim an interest if he is suing
the buyer for breach of warranty.
Transfer of Property in Goods
The property in the goods is said, to be transferred from the seller to the buyer when the latter
acquires the proprietary rights over the goods and the obligations linked thereto. 'Property in
Goods' which means the ownership of goods, is different from ' possession of goods' which
means the physical custody or control of the goods.
The transfer of property in the goods from the seller to the buyer is the essence of a contract of
sale. Therefore the moment when the property in goods passes from the seller to the buyer is
significant for following reasons:
a. Ownership -- The moment the property in goods passes, the seller ceases to be their
owner and the buyer acquires the ownership. The buyer can exercise the proprietary
rights over the goods. For example, the buyer may sue the seller for non-delivery of the
goods or when the seller has resold the goods, etc.
b. Risk follows ownership -- The general rule is that the risk follows the ownership,
irrespective of whether the delivery has been made or not. If the goods are damaged or
destroyed, the loss shall be borne by the person who was the owner of the goods at the
time of damage or destruction. Thus the risk of loss prima facie is in the person in whom
the property is.
c. Action Against Third parties -- When the goods are in any way damaged or destroyed by
the action of third parties, it is only the owner of the goods who can take action against
them.
d. Suit for Price - The seller can sue the buyer for the price, unless otherwise agreed, only
after the gods have become the property of the buyer.
e. Insolvency - In the event of insolvency of either the seller or the buyer, the question
whether the goods can be taken over by the Official Receiver or Assignee, will depend
on whether the property in goods is with the party who has become insolvent.
Essentials for Transfer of Property -- The two essentials requirements for transfer of property in
the goods are:
1. Goods must be ascertained: Unless the goods are ascertained, they (or the property
therein) cannot pass from the seller to the buyer. Thus, where there is a contract for the
sale of unascertained goods, no property in the goods is transferred to the buyer unless
and until the goods are ascertained
2. Intention to PASS Property in Goods must be there: In a sale of specific or ascertained
goods the property in them is transferred to the buyer at such time as the parties to the
contract intend it to be regard shall be had to the terms of the contract, the conduct of
the parties and the circumstances of the case.