NATIONAL LAW INSTITUTE UNIVERSITY BHOPAL

SECOND TRIMESTER

CONTRACT LAW- 2 PROJECT

SPECIFIC GOODS IN A DELIVERABLE STATE

SALE OF GOODS ACT,1930( SECTION-20 )

SUBMITTED BY: SUBMITTED TO:

RADHA CHARPOTA PROF. NEHA SHARMA MAM
2019 BALLB[HONS] 30
CERTIFICATE

This is to certify that the Project titled – ‘Specific goods in a deliverable state’
has been prepared and submitted by Radha Charpota ,who is currently
pursuing her BA LLB .(Hons.)at National Law Institute University,Bhopal in
fulfilment of Contract Law -2 course .It is also certified this is original
research report and this projecthas not been submitted to any other university
,nor published in any journal.

Date:

Signature of the student:

Signature of the research supervisor:

Acknowledgement
This project has been made possible by the unconditional support of many
people, I would like toacknowledge and extend my heartfelt gratitude to Prof.
Neha Sharma for guiding me throughout the development of this project into
a coherent whole by providing helpful insights and sharing their brilliant
expertise. I, also would like to thank the members of the library staff and
computer section for the cooperation in making available the books and
accessing the internet even during their free time. I am deeply indebted to my
parents, seniors and friends for all the moral support and encouragement.

RadhaCharpota
2019 BALLB [HONS] 30
Table of Contents
INTRODUCTION:....................................................................................................................................5
DEFINATION............................................................................................................................................6
SPECIFIC GOODS IN A DELIVERABLE STATE............................................................................................7
CASES RELATED TO SECTION 2..............................................................................................................8
CONCLUSION:........................................................................................................................................9
BIBLIOGRAPHY:......................................................................................................................................9
INTRODUCTION
The Sale of Goods Act, 1930 is an act to define and amend the law relating to the
sale of goods. Contract for the sale of goods are subject to the general legal
principles of the Contract Act, which are offer, acceptance, capacity of the parties,
free consent, consideration etc. Earlier, The Indian Contract Act, 1872 embodied
very simple and elementary rules relating to the sale of goods. But later, the
developments of modern business relations found the Indian Contract Act
inadequate to deal with the new regulations or give effect to the new rules or
principles. With this the provisions relating to the sale of goods contained in the
Indian Contract Act, 1872 were repealed. Later, Sale of Goods Act, 1930 came and
all the repealed provisions were reenacted by the same Act. Section 45 of The Sale
of Goods Act, 1930 deals with the concept of unpaid seller. Also the Act discusses
all the rights of the unpaid seller against the goods and the buyer personally. To
explain and analyze the rights of the unpaid seller is the object of the paper.
KEYWORDS: Sale of Goods Act, 1930, Unpaid Seller, Rights of unpaid seller
Mercantile Laws are those laws that govern and regulate trade and commerce.
Such laws deal with the various rights and obligations of the parties to a mercantile
agreement. Indian Mercantile Laws covers various Acts like:
1. The Indian Contract Act, 1872
2. The Sale of Goods Act, 1930
3. The Partnership Act, 1932
4. The Companies Act, 1956
5. Copyright Act etc.
Originally, the laws or provisions relating to the sale of goods or movables were
contained in the chapter VII (Section 76 to 123) of the Indian Contract Act, 1872.
Basically, contract for the sale of goods are subject to the general legal principles
of the Contract Act, which are offer, acceptance, capacity of the parties, free
consent, consideration etc. The Indian Contract Act, 1872 embodied very simple
and elementary rules relating to the sale of goods. But later, the problem has been
emerged due to this. The developments of modern business relations found the
Indian Contract Act inadequate to deal with the new regulations or give effect to
the new rules or principles. With this the provisions relating to the sale of goods
contained in the Indian Contract Act, 1872 were repealed. Later, Sale of Goods
Act, 1930 came and all the repealed provisions were re-enacted by the same Act.
The Sale of Goods Act, 1930 went through the various amendments and adaptation
orders in due course. The latest one was the Multimodal Transportation of Goods
Act, 1993.
The Sale of Goods Act, 1930 is an act to define and amend the law relating to the
sale of goods1.1 Section 12 says that the Act extends to the whole of India except
the State of Jammu and Kashmir and came into force on the first day of July, 1930.
The Act lays down special provisions governing the contract of sale of goods. The
general law of contract is also applicable to contracts for the sale of goods unless
they are inconsistent with the express provisions of the Sale of Goods Act. The
Sale of Goods Act, 1930 comprises of total sixty six sections. A contract for sale of
goods has, however, certain peculiar features such as, transfer of ownership of the
goods, delivery of goods rights and duties of the buyer and seller, remedies for
breach of contract, conditions and warranties implied under a contract for sale of
goods, etc. These peculiarities are the subject matter of the provisions of the Sale
of Goods Act, 1930. Section 43 defines the contract of sale of goods. It says that
for contract of sale there are some requirements. Like:
1. There must be at least two parties
2. The subject matter of the contract must be goods
3. Price
4. Transfer of property in goods
5. Absolute or conditional
6. All other essential elements of a valid contract.
The researcher through this research paper tries to deal with the concept of unpaid
seller and his rights. Section 45 of the Sale of Goods Act deals with the definition
of unpaid seller and there are various sections which talk about the rights of the
unpaid seller.

1
Avtar Singh, LAW OF SALE OF GOODS, 7th ed., 2011
2
2 Short title, extent and commencement – (1) This Act may be called the Sale of Goods Act, 1930.
(2) It extends to the whole of India except the State of Jammu and Kashmir.
(3) It shall come into force on the first day of July, 1930.
3
Sale and agreement to sell.- (1) A contract of sale of goods is a contract whereby the seller transfers or agrees to
transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner
and another.
(2) A contract of sale may be absolute or conditional
(3) Where under a contract of sale the property in the goods in transferred from the seller to the buyer, the
contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or
subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.
(4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the
property in the goods is to be transferred.
STATEMENT OF PROBLEM

OBJECTIVES
The aim of this research is to discuss the concept of unpaid seller and the various
rights available to him against the goods as well as against the buyer personally
with the help of pertinent judicial interpretations.

• To understand the concept of unpaid seller

• To know and analyze the rights of the unpaid seller
• To distinguish the right of lien and right of stoppage in transit

METHOD OF STUDY
This project is largely based on doctrinal method of collection.

LITERATURE REVIEW

Avtar Singh, LAW OF SALE OF GOODS, 7th ed., 2011

The book is exclusive deals with the Sale of Goods Act, 1930. It deals with the law
relating to the sale of goods and hire- purchases in India. It defines the position and
liability of a manufacturer, dealer and seller in relation to a purchaser viz. The Sale
of Goods Act, 1939 and the Hire- Purchaser Act, 1972. The relevancy of the
Consumer Protection Act, 1986 in sale of goods are also explained in the book.
The book is very informative and authoritative in respect to the Sale of Goods Act.
S.C. Tripathi, THE SALE OF GOODS ACT, 2nd ed., 2010 The book is very much
useful for the important branch of Mercantile Law. It deals with the formation of
the contract, formalities of the contract, subject matter of contract, condition and
warranties, performance of the contract, rights of unpaid seller, unpaid seller’s lien,
stoppage in transit, transfer by buyer and seller, suits for breach of the contract etc.
with respect to the Sale of Goods Act.
S.K. Kapoor, CONTRACT- II ALONG WITH SALE OF GOODS ACT AND
INDIAN PARTNERSHIP ACT, 13th ed., 2012
The book is a compilation of specific contracts, The Sale of Goods Act, 1930,
Indian Partnership Act, 1932 etc. The concept of unpaid seller and his rights
against the goods and buyer personally have been dealt in a very detailed form.
The book deals with all the pertinent judicial interpretations related to the unpaid
seller and his rights.
S.S. Srivastava, “LAW OF CONTRACT I & II”, 4th ed., 2011
The book comprehensively covers all the laws relating to Law of Contract. It
exclusively deals with all the mercantile laws including Specific Relief Act, Sale of
Goods Act, Partnership Act, Negotiable Instruments Act etc. To explain and
analyze the concept of unpaid seller with help of leading cases, the book is very
much useful.
Understanding the Meaning of an Unpaid Seller
The term ‘unpaid seller’ may be defined as the seller to whom the full price of the
goods sold has not been paid. Section 454 of the Sale of Goods Act, 1930 explains
the concept of unpaid seller. The definition emphasizes following characteristics of
an unpaid seller:
1. He must sell goods on cash terms and not on credit, and he must be unpaid.
2. He must be unpaid either wholly or partly. Even if only a portion of the
price, however small, remains unpaid, he is deemed to be an unpaid seller.
Where the price is paid through a bill of exchange or other negotiable
instrument, the same must be dishonored.
3. He must not refuse to accept payment when tendered. If the price has been
tendered by the buyer but the seller wrongfully refuses to take the same, he
ceases to be an unpaid seller.
There are several features of the unpaid seller like he must sell goods on the cash
basis and must be unpaid, if he sells on credit basis, he is not an unpaid seller
during the period of credit, the term of credit has expired and the price has not been
paid to him, he must be unpaid wholly or partially i.e. if a part of price remains
unpaid, he is unpaid, when the price is paid in the form of negotiable instruments
and it has been dishonored.
For e.g., Party A sells a car on cash basis to party B and the price has not been
received yet, A sells good to B on 5 months credit period and B turns insolvent
after 2 months, A sells TV set to B on the same day cheque basis, the cheque is
dishonored due to insufficient funds. A is an unpaid seller.
There are some conditions in which seller will not term as an unpaid seller. If
buyer offers payment and seller refuses to accept, the seller is not an unpaid seller.
In Laxmilal v. Paras Ram, a contract for sale of goods, on failure of purchaser to
pay money, the purchaser executed promissory note to secure such money, the
seller sued the purchaser on the said basis. The maintainability of the suit was
challenged on the ground that the seller had no money lending license. It was held
that sale transaction on credit basis cannot be treated to be loan. The Rajasthan
High Court observed that the loan is money advanced on interest over which the
interest may be charged in cash or kind. Even if this definition is extended, then
also it cannot be said that the sale transaction on credit basis can be treated to be
loan advanced to the purchaser of the goods during the course of the business
engaged in the trade.
Section 45 (2), which has been mentioned earlier, provides extensive definition of
an unpaid seller in which rights of an unpaid seller would be similar to those of the
ordinary seller. Thus, the agent of the seller whose name is endorsed in the bill of
lading or such an agent or consignor who himself paid the price or who is directly
responsible for the payment are in a position of the seller.
M/s. Mewar Textiles Mills v. M/s. Sitaram Basanti Lal Jain, for Mewar Textiles
Mills a separate wagon was supplied by B and instead of mill the price of coal was
paid to mines. The mills refused to take coal supplied to them. Because, the
delivery of the goods has not been taken, therefore, the railway officials charged
demurrage and retained the goods. ‘B’ filed the petition for the recovery of price
and he argued that the price of coal was paid instead of the mill. It was held that
the case was maintainable and it cannot be said that ‘B’ is a seller under the Sale of
Goods Act under section 45. So, for compensation the petition can be filed against
the mill.
The protections afforded by the Act to an unpaid seller are extended to “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 agent9 who has himself paid, or
is directly responsible for, the price”.

Rights of Unpaid Seller: An Analysis

Section 464 of the Sale of Goods Act, 1930 talks about the unpaid seller’s rights.
Rights of unpaid seller are basically divided into two parts: 1. Against the goods 2.

4
Unpaid seller’s rights.—
(1) 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
—
(a) a lien on the goods for the price while he is in possession of them;
(b) 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;
(c) a right of re-sale as limited by this Act.
(2) 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.
Against the buyer personally Rights of unpaid seller against the goods are further
divided into two parts:
1. Where the property in goods has transferred to the buyer
2. Where the property in goods has not passed to the buyer
The Sale of Goods Act, 1930 provides three kinds of rights to the unpaid seller
against the goods where the property in goods has transferred to the buyer.
1. Right of Lien
2. Right of stoppage in goods in transit
3. Right to resale
The Sale of Goods Act, 1930 provides one right to the unpaid seller against the
goods where the property in goods has not transferred to the buyer.
1. Right of withholding delivery.
According to Bayley, J.5—The buyer has no right to have possession of the
goods till he pays the price. The seller’s right in respect of the price is not a
mere lien which he will forfeit if he parts with the possession, but grows out of
his original ownership and dominion, and payment or a tender of the price is a
condition precedent on the buyer’s part and until he makes such payment or
tender, he has no right to the possession.
The Sale of Goods Act, 1930 provides three kinds of rights to the unpaid seller
against the buyer personally.
1. Suit for price
2. Suit for damages for non acceptance
3. Repudiation of contract before due dates
4. Suit for interest
So, these are some of the rights of the unpaid seller in various instances mentioned
in the Sale of Goods Act, 1930. All these rights will be discussed in a very detailed
form in this chapter. So, first of all, researcher would like to deal with all these
rights which exist against the goods.
Unpaid Seller’s Rights against the Goods The first right of the unpaid seller against
the goods would be Rights of Lien where the property in goods has transferred to

5
Bloxam v. Sanders, 4 B & C 948.
the buyer. Section 46 (1)(a), 476, 487 and 498 of the Sale of Goods Act, 1930 deal
with the rights of lien.
‘Lien’ is the right to retain possession of goods and refuse to deliver them to the
buyer until the price due in respect of them is paid or tendered. An unpaid seller in
possession of goods sold is entitled to exercise his lien on the goods in the
following cases:
(a) Where the goods have been sold without any stipulation as to credit; (b)
(b) Where the goods have been sold on credit but the term of credit has expired;
(c) Where the buyer becomes insolvent even though the period of credit may not
have yet expired.
In the case of buyer’s insolvency the lien exists even though goods had been sold
on credit and the period of credit has not yet expired. When the goods are sold on
credit the presumption is that the buyer shall keep his credit good. If, therefore,
before payment the buyer becomes insolvent, the seller is entitled to exercise this
right and hold the goods as security for the price. The effect of buyer’s insolvency
is that all stipulations as to credit are put to an end and the seller has a right to say,
“I will not deliver the goods until I see that I shall get my price paid.”9 The unpaid
seller’s lien is a possessory lien, i.e., the lien can be exercised as long as the seller
remains in possession of the goods. He may exercise his right of lien
notwithstanding that he is in possession of the goods as agent or bailee for the
buyer10.
Transfer of property in the goods or transfer of documents of title to the goods
does not affect the exercise of this right, provided the goods remain in the actual
possession of the seller. In fact when property has passed to the buyer then only
retaining of goods is called technically ‘lien.’
Where the property in goods has not passed to the buyer and the title is still with
the seller then it is, strictly speaking, anomalous to say that the seller has a lien

6
Seller’s lien.- (1) 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 stipulations 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. (2) The seller may exercise his
right of lien notwithstanding that he in possession of the goods as agent or bailee for the buyer.
7
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.
8
Termination of lien.- (1) The unpaid seller of goods losses 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, (c) By waiver thereof. (2) The
unpaid seller of goods, having a lien thereon, not lose his lien by reason only that he has obtained a decree for the
price of the goods.
9
Griffith’s v. Parry
10
Sec. 47(2) of the Sale of Goods Act, 1930
 against his own goods. The seller’s lien when property has not passed to the buyer
is termed as ‘a right of withholding delivery.
Accordingly, Section 46(2) provides:
“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
coextensive with his rights of lien and stoppage in transit where the property has
passed to the buyer.”
This right of lien can be exercised only for the non-payment of the price and not
for any other charges, e.g., maintenance or custody charges, which the seller may
have to incur for storing the goods in exercise of his lien for the price.
This right of lien extends to the whole of the goods in his possession even though
part payment for those goods has already been made. In other words the buyer is
not entitled to claim delivery of a portion of the goods on payment of a
proportionate price.11
Further, 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.12
Also, the lien can be exercised even though the seller has obtained a ‘decree’ for
the price of the goods.13
But, when lien is lost? As already observed, lien depends on physical possession of
goods. Once the possession lost, the lien is also lost. Section 49 accordingly
provides that the unpaid seller of goods loses his lien thereon in the following
cases:
(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; or
(b) When the buyer or his agent lawfully obtains possession of the goods; or
(c) When the seller expressly or impliedly waives his right of lien. An implied
waiver takes place when the seller grants fresh term of credit or allows the buyer to
accept a bill of exchange payable at a future date or assents to a sub-sale which the
buyer may have made.
It may be noted that right of lien, if once lost, will not revive if the buyer redelivers
the goods to the seller for any particular purpose.

Thus, where a refrigerator after being sold was delivered to the buyer and since it
was not functioning properly, the buyer delivered back the same to the seller for
repairs; it was held that the seller could not exercise his lien over the refrigerator.14

11
S.K. Kapoor, CONTRACT-II, 13th ed., 2012, p. 245
12
Section 48 of the Sale of Goods Act, 1930
13
Section 49(2) of the Sale of Goods Act, 1930
14
Eduljee v. John Bros.
The second right of the unpaid seller against the goods would be Right of stoppage
in goods in transit where the property in goods has transferred to the buyer. Section
5015, 5116, 5217 deals with the right of stoppage in goods in transit.
The right of stoppage in transit means the right of stopping further transit of the
goods while they are with a carrier for the purpose of transmission to the buyer,
resuming possession of them and retaining possession until payment or tender of
the price.
Thus, in a sense this right is an extension of the right of lien because it entitles the
seller to regain possession even when the seller has parted with the possession of
the goods.
Section 50 provides the conditions in which this right of stoppage in goods in
transit can be exercised. So, an unpaid seller can exercise this right only when:
(a) The buyer becomes insolvent:

15
Right of stoppage in transit.-
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.
16
2 51. Duration of transit.-
(1) 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.
(2) 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.
(3) 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.
(4) 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.
(5) When goods are delivered to a ship chartered by the buyer, it is a question depending on the circumstances of
the particular case, whether they are in the possession of the master as a carrier or as agent of the buyer.
(6) Where the carrier or other bailee wrongfully refuses to delier the goods to the buyer or his agent in that behalf,
the transit is deemed to be at an end.
(7) 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 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.
17
How stoppage in transit is effected.-
(1) The unpaid seller may exercise his right to stoppage in transit either by taking actual possession of the goods, or
by giving notice of his claim to the carrier or other bailee in whose possession the goods are. Such notice may be
given either to the person in actual possession of the goods or to his principal. In the later case the notice, to be
effectual, shall be given at such time and in such circumstances, that the principal, by the exercise of reasonable
diligence, may communicate is to his servant or agent in time to prevent a delivery to the buyer.
(2) Whether notice of stoppage in transit is given by the seller to the carrier or other bailee in possession of the
goods, he shall re-deliver the goods to, or according to the directions of, the seller. The expenses of such redelivery
shall be borne by the seller.
The buyer is said to be insolvent when he has ceased to pay his debts in the
ordinary course of business, or cannot pay his debts as they become due, whether
he is declared an insolvent or not [Sec. 2(8)]; and
(b) The property has passed to the buyer: If property has not passed to the buyer
then this right is termed as the “right of withholding delivery” [Sec. 46(2)]; and
(c) The goods are in the course of transit:
This means that goods must be neither with the seller nor with the buyer nor with
their agent. They should be in the custody of a carrier as an independent
middleman (i.e., in his own right as a carrier) e.g., railways and common carriers
whose business is to transport goods of others. The carrier must not be either
seller’s agent or buyer’s agent. Because if he is seller’s agent, the goods are still in
the hands of seller in the eye of law and hence there is no transit, and if he is
buyer’s agent, the buyer gets delivery in the eye of law and hence question of
stoppage does not arise.
Section 51 talks about the duration of transit. Since the right of stoppage in transit
can be exercised only so long as the goods are in the course of transit, it becomes
necessary to know as to when the transit begins and when it comes to an end.
When the transit comes to an end the right of stoppage cannot be exercised.18
According to Section 51, 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 takes delivery of them.
Thus the transit continues so long as the goods are not delivered to the buyer or his
agent, no matter whether they are lying at the destination with the carrier awaiting
transmission or are in actual transit.
The goods are still deemed to be in transit if they are rejected by the buyer and the
carrier or other bailee continues in possession of them, even if the seller has
refused to receive them back. The transit is deemed to be at an end and the seller
cannot exercise his right of stoppage in the following cases:
a. When the buyer or his agent takes delivery after the goods have
reached destination.
b. When the buyer or his agent obtains delivery of the goods before their
arrival at the appointed destination.
c. When the goods have arrived at their destination and the carrier
acknowledges to the buyer or his agent that he holds the goods on his
behalf.
d. When the goods have arrived at their destination but the buyer instead
of taking delivery requests the carrier to carry the goods to some
further destination and the carrier agrees to take them to the new
destination
18
Avtar Singh, LAW OF SALE OF GOODS, 7th ed., 2011, p. 191
 e. When the carrier wrongfully refuses to deliver the goods to tie buyer
or his agent.
f. When part delivery of the goods has been made to the buyer with an
intention of delivering the whole of the goods, transit will be at an end
for the remainder of the goods also which are yet in the course of the
transit.
Section 52 explains that how right of stoppage is exercised. The unpaid seller may
exercise his right of stoppage in transit either:
(a) By taking actual possession of the goods, or
(b) By giving notice of his claim to the carrier or other bailee in whose
possession the goods are.
Such notice may be given either
(a) to the person in actual possession of the goods, or
(b) to his principal. In the latter case, notice must be given well in advance to
enable the principal to communicate with his agent or servant in time, so as to
prevent delivery to the buyer.
It is the duty of the carrier, after receiving due notice, not to deliver the goods to
the buyer but to redeliver them to, or according to the directions of the seller.
If by mistake he delivers the goods to the buyer, he can be made liable for
conversion. The expenses of redelivery are to be borne by the seller.
Lien and Stoppage in Transit Distinguished:
The main points of distinction between these two rights of an unpaid seller are as
follows:
1. The seller’s lien attaches when the buyer is in default, whether he be solvent
or insolvent. The right of stoppage in transit arises only when the buyer is
insolvent.
2. Lien is available only when the goods are in actual possession of the seller
while right of stoppage is available when the seller has parted with
possession and the goods are in the custody of an independent carrier.19
3. The right of lien comes to an end once the seller hands over the possession
of the goods to the carrier for the purpose of transmission to the buyer. On
the other hand, the right of stoppage in transit commences after the seller has
delivered the goods to a carrier for the purposes of transmission to the buyer
and continues until the buyer has acquired their possession.
4. The right of lien consists in retaining the possession of the goods while the
right of stoppage consists in regaining possession of the goods.

19
S.S. Srivastava, LAW OF CONTRACT I & II, 4th ed., 2011, p. 542
So, the last right of the unpaid seller against the goods would be Right of resale
where the property in goods has transferred to the buyer. Section 5420 exclusively
deals with the right of resale.
The right of resale is a very valuable right given to an unpaid seller. In the absence
of this right, the unpaid seller’s other rights against the goods, namely, lien’ and
‘stoppage in transit,’ would not have been of much use because these rights only
entitle the unpaid seller to retain the goods until paid by the buyer. If the buyer
continues to remain in default, then should the seller be expected to retain the
goods indefinitely, especially when the goods are perishable?
Obviously, this cannot be the intention of the law. Section 54, therefore, gives to
the unpaid seller a limited right to resell the goods in the following cases:
(a) Where the goods are of a perishable nature; or
(b) Where such a right is expressly reserved in the contract in case the buyer
should make a default; or
(c) Where the seller has given a notice to the buyer of his intention to resell and
the buyer does not pay or tender the price within a reasonable time.
If on a resale there is a loss to the seller, he can recover it from the defaulting
buyer. But if there is a surplus on the resale, the seller can keep it with him because
the buyer cannot be allowed to take advantage of his own wrong.
If, however, no notice of resale [as required in case (c) above] is given to the
buyer, the right of seller to claim loss and retain surplus, if any, is reversed.
In other words, if the unpaid seller fails to give notice of resale to the buyer, where
neither the goods are of perishable nature nor such a right was expressly reserved,
he cannot recover the loss from the buyer and is under an obligation to hand over
the surplus, if any, to the buyer, arising from the resale.
Thus, it will be seen that giving of notice to the buyer, when so required, is very
necessary to make him liable for the breach of contract.

20
Sale not generally rescinded by lien or stoppage in transit.-
(1) Subject to the provisions of this section, a contract of sale is not rescinded by the mere exercise by an unpaid
seller of his right of lien or stoppage in transit.
(2) Where the goods are of a perishable nature, or where the unpaid seller who has exercised his right of lien or
stoppage in transit gives notices to the buyer of his intentions to re-sell, the unpaid seller may, if the buyer does
not within a reasonable time pay or tender the price, re-sell the goods within a reasonable time and recover from
the original buyer damages for any loss occasioned by his breach of contract, but the buyer shall not be entitled to
any profit which may occur on the re-sale. If such notices is not given, the unpaid seller shall not be entitled to
recover such damages and the buyer shall be entitled to the profit, if any, on the re-sale.
(3) Where an unpaid seller who has exercised his right of lien or stoppage in transit re-sells the goods, the buyer
acquires a good title thereto as against the original buyer, notwithstanding that no notice of the re-sale has been
given to the original buyer.
(4) Where the seller expressly reserves a right of re-sale in case the buyer should make default, and on, the buyer
making default, re-sells the goods, the original contract of sale is thereby rescinded, but without prejudice to any
claim which the seller may have for damages.
 It is so because such a notice gives an opportunity to the buyer either to pay the
price and have the goods, or, if he cannot pay, to supervise the sale to see that the
same is properly made. It is important that absence of notice, when so required,
affects the rights of the unpaid seller himself only as discussed above and it does
not affect the title of the subsequent buyer who will acquire a good title to the
goods.
Section 54(3) specially declares- “Where an unpaid seller who has exercised his
right of lien or stoppage in transit resells the goods, the buyer acquires a good title
thereto as against the original buyer, notwithstanding that no notice of the resale
has been given to the original buyer.”
Also, the Sale of Goods Act, 1930 provides right to the unpaid seller against the
goods where the property in goods has not transferred to the buyer
. 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.

Unpaid Seller’s Rights against Buyer Personally

The first right that unpaid seller has against the buyer would be suit for price.
Section 5521 of the Sale of Goods Act, 1930 explains the suit for price. Where
property in goods has passed to the buyer; or where the sale price is payable ‘on a
day certain’, although the property in goods has not passed; and the buyer
wrongfully neglects or refuses to pay the price according to the terms of the
contract, the seller is entitled to sue the buyer for price, irrespective of the delivery
of goods. Where the goods have not been delivered, the seller would file a suit for
price normally when the goods have been manufactured to some special order and
thus are unsaleable otherwise.
21
Suit for price.- (1) 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 according to the terms of the contract, the seller may sue
him for the price of the goods. (2) Where under a contract of sale the price is payable on a day certain irrespective
of delivery and the buyer wrongfully neglects or refuses to pay such price, the seller may sue him for the price
although the property in the goods has not passed and the goods have not been appropriated to the contract.
Suit for damages for non-acceptance22-- Where the buyer wrongfully neglects or
refuses to accept and pay for the goods, the seller may sue him for damages for
non-acceptance. The seller’s remedy in this case is a suit for damages rather than
an action for the full price of the goods.
The damages are calculated in accordance with the rules con-tained in Section 73
of the Indian Contract Act, that is, the measure of damages is the estimated loss
arising directly and naturally from the buyer’s breach of contract. Where the goods
have a ready market the principle applicable is that the seller may recover from the
buyer damages equal to the difference between the contract price and the market
price on the data of the breach of the contract. Thus, if the difference between the
contract price and market price is nil, the seller can get only nominal damages.23
But where the goods do not have any ready market, the measure of damages will
depend upon the facts of each case.
For example, in Thompson Ltd. v. Robinson24, the damages were assessed on the
basis of profits lost. In that case, T Ltd., who were car dealers, contracted to supply
a motorcar to R.R refused to accept delivery. It was found as a fact that the supply
of cars exceeded the demand at the time of breach and hence in a sense there was
no market price on the date of breach. Held, T Ltd., were entitled to damages for
the loss of their bargain viz., the profit they would have made, as they had sold one
car less than they otherwise would have sold. To take another illustration, if the
goods have been manufactured to some special order and they are unsaleable and
have been manufactured to some special order and they are unsaleable and have no
value at all for other buyers, then the seller may even be allowed the full price of
the goods as damages.
Suit for special damages and interest25-- This Section entitles the seller to sue the
buyer for ‘special damages’ also for such loss “which the parties knew, when they
made the contract, to be likely to result from the breach of it.

22
Damages for non-acceptance.-
Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may sue him for
damages for non-acceptance.
23
Charter v. Sullivan, [1957] 2 QB 117
24
[1955] Ch 177
25
Interest by way of damages and special damages.-
(1) Nothing in this Act shall affect the right of the seller or the buyer to recover interest or special damages in any
case whereby law interest or special damages may be recoverable, or to recover the money paid where the
consideration for the payment of it has failed.
(2) In the absence of a contract to the contrary, the Court may award interest at such rate a it think fit one the
amount of the price-
(a) to the seller in a suit by him for the amount of the price.- from the date of the tender of the goods or from the
date on which the price was payable.
(b) to the buyer in a suit by him for the refund of the price in a case of a breach of the contract on the part of the
seller- from the date on which the payment was made.
” In fact the Section is only declaratory of the principle regarding ‘special
damages’ laid down in Section 73 of the Indian Contract Act. The Section also
recognizes unpaid seller’s right to get interest at a reasonable rate on the total
unpaid price of the goods sold, from the time it was due until it is actually paid.26
(a) Suit for Damages for Non-delivery27-- Where the seller wrongfully neglects
or refuses to deliver the goods to the buyer, the buyer may sue the seller for
damages for non-delivery.
(b) Suit for Specific Performance28-- In any suit for breach of contract to deliver
specific or ascertained goods, the court may direct that the contract shall be
performed specifically.
(c) Suit for Breach of Warranty29-- Where there is a breach of warranty by the
seller, or where the buyer elects or is compelled to treat any breach of a
condition on the part of the seller as a breach of warranty, the buyer is not by
reason only of such breach of warranty entitled to reject the goods, but he
may –
(i) Set up against the seller the breach of warranty in diminution or
extinction of the price; or
(ii) Sue the seller for damages for breach of warranty. Note: The fact that
a buyer has set up a breach of warranty in diminution or extinction of
the price does not prevent him from suing for the same breach of
warranty if he suffered further damage.
Example: X sold a second hand Radio to Y who spent Rs 100 on the repair of this
Radio. This Radio was seized by the police as it was a stolen one. Y filed a suit

26
Telu Ram Jain v. Aggarwal & Sons, AIR 1991 P H 140.
27
Damages for non-delivery.-
Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may sue the seller for
damages for non-delivery.
28
Specific performance.-
Subject to the provisions of Chapter II of the Specific Relief Act, 1877, in any suit for breach of contract to deliver
specific or ascertained goods, the Court may, if it thinks fit, one the application of the plaintiff, by its decree direct
that the contract shall be performed specifically, without giving the defendant the option of retaining the goods on
payment of damages. The decree may be unconditional, or upon such terms and conditions as to damages,
payment of the price or otherwise, as the Court may deem just, and the application of the plaintiff may be made at
any time before the decree.
29
Remedy for breach of warranty –
(1) Where there is a breach of warranty by the seller, or where the buyer elects or is compelled to treat any breach
of a condition on the part of the seller as a breach of warranty, the buyer is not by reason only of such breach of
warranty entitled to reject the goods; but he may-
(a) Set up against the seller the Brach of warranty in diminution or extinction of the price; or
(b) Sue the seller for damages for breach of warranty.
(2) The fact that a buyer has set up a breach of warranty in diminution or extinction of the price does not prevent
him from suing for the same breach of warranty if he has suffered further damage.
against X for recovery of damages for breach of warranty of quite possession
including the cost of repairs. It was held that Y was entitled to recover the same.30
(d) Right to Treat the Contract as Rescinded or Operative in Case of
Repudiation of Contract by Seller before due Date31 -- Where seller
repudiates the contract before the date of delivery, the buyer 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.
(e) Suit for Interest32--In case of breach of the contract on the part of the seller,
the buyer may sue the seller for interest from the date on which the payment
was made.

30
Mason v. Burmingham
31
Repudiation of contract before due date.-
Where either party to a contract of sale repudiates the contract before the date of delivery, the other may either
treat the contracts as subsisting and wait till the date of delivery, or he may treat the contract as rescinded and use
for damages for the breach.
32
Interest by way of damages and special damages.-
(1) Nothing in this Act shall affect the right of the seller or the buyer to recover interest or special damages in any
case whereby law interest or special damages may be recoverable, or to recover the money paid where the
consideration for the payment of it has failed.
(2) In the absence of a contract to the contrary, the Court may award interest at such rate a it think fit one the
amount of the price-
(a) to the seller in a suit by him for the amount of the price.- from the date of the tender of the goods or from the
date on which the price was payable. (b) to the buyer in a suit by him for the refund of the price in a case of a
breach of the contract on the part of the seller- from the date on which the payment was made.
Conclusion
After the research, the researcher would like to conclude that to study the Sale of
Goods Act, 1930, it should be understood in five different parts i.e. formation of a
contract, performance of contract, suit for breach of contract, effects of the contract
and unpaid seller. It can be deducted that unpaid seller is defined as the seller to
whom the full price of the goods sold has not been paid. The legal definition of
unpaid seller has explained in section 45 of the Sale of Goods Act, 1930. So, he is
provided with various rights against the goods sold and against the buyer
personally. Rights against the goods are given to him under two circumstances,
first, where the ownership of the goods has transferred to the buyer and second,
where the ownership of the goods has not transferred to the buyer. There are
various judicial interpretations in which the concept of unpaid seller has been
explained. Also, there are various leading case laws which explain the conditions
that in which situation unpaid seller can exercise his rights or under which
situations he cannot.