Special Contract

UNPAID SELLER
Name- Nihar Gupta
UID-19BAL5129
Class- B.A.LL.B
Sec- B
INTRODUCTION
• The Sale of Goods Act 1930 provides the
remedies available to both the seller and the
buyer in different possible circumstances.
• When a buyer and a seller has entered into a
contract, each party is to perform the promise
made to the other.
• If one of the parties does not perform one or
more of the promises made, then there is breach
of contract and the other party can have remedy
for the breach.
AN UNPAID SELLER
• The definition of ‘unpaid seller’ is provided in
section 45 of the Sale of Goods Act and it runs as
follows “the seller of the goods deemed to be an
unpaid seller is:
▫ when the whole of the price has not been paid
▫ 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.”
• Thus, a seller who has received only a part of the
payment is an unpaid seller.
AN UNPAID SELLER
• However, a seller is not an unpaid seller if the
buyer has tendered, i.e. offered to pay the price,
and the seller has refused to accept the payment.
In such a case, the seller will lose the rights of an
unpaid seller.
• The seller must not refuse to accept the payment
when tendered. If the price has been offered by
the buyer but the seller wrongfully refuse to
accept it, the seller is not considered as
an‘unpaid seller’.
THE RIGHTS OF AN 'UNPAID SELLER'
• Rights against the goods.
• Rights against the buyer.
RIGHTS OF AN ‘UNPAID SELLER’
AGAINST THE GOODS:
• Where the property of goods has passed to the buyer
▫ Right of Lien
 The Right of Lien means the right to keep the
possession of the goods until the charges or the
price has been paid.
 This right is available to the unpaid seller where
the goods have been transferred to the buyer.
 Even if the seller has handed over the
documents of title to the buyer, the lien is not
affected
RIGHT OF LIEN CAN BE EXERCISED IF
• where the goods have been sold without
stipulation as to credit; or
• where the goods have been sold on credit but the
term of credit has expired; or
• when the buyer has become insolvent
TERMINATION OF LIEN
• The unpaid seller loses the right of lien as soon
he fails to have the possession of good
▫ when he delivers it to a carrier, or
▫ delivers to the buyer ,or
▫ by a waiver ,or
▫ when the buyer makes the payment.
CASE LAW 1:
• Valpy vs. Gibson:
The goods sold were delivered to the buyer’s shipping
agents, who had put them on board a ship. However,
the goods were returned to the sellers for repacking.
While they were still with the sellers for this purpose,
the buyer became insolvent and the sellers claimed to
retain the goods in the exercise of right of lien
because they were unpaid. However it was held that
he could not do so as he lost their lien by delivery of
goods to the shipping agent.
RIGHT OF STOPPAGE IN TRANSIT
• In certain situations an unpaid seller can have
the right to continue with the possession of
goods as long as they have not been delivered to
the buyer and may also have the right over them
till the buyer has made the payment.
▫ The seller must be unpaid;
▫ The buyer must be insolvent; and
▫ “The seller must have parted with the possession
of goods and the buyer must not have acquired it,”
i.e., goods should be in transit.
Right of Re-sale
• Where the goods are of perishable and will lose
value in a short time
• Where the unpaid seller has used his right of lien
or of stoppage in transit and gives notice to the
buyer of his decision to resell the goods.
• Where the seller expressly reserves his right of
resale
Rights of an Unpaid Seller where the
Ownership of the Goods has not passed
to the Buyer.
• 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. This right is similar to and goes along
with the unpaid seller’s right of lien and
stoppage in transit where the property has
passed to the buyer
• Seller has the right to hold back delivery of the
goods until the price is paid even though the sale
was on credit.
Rights against the buyer
• Suit for price.
▫ Illustration: Rama sold 100 grams of silver to
Shyama for Rs.2, 000/- The payment was to be
made within two months of the sale. Shyam was
unable to pay the price within the agreed period of
two months. Here Rama can file a suit against
Syama for the recovery of the price of silver
Rights against the buyer
• Suit for damages for non-acceptance of the
goods.
▫ Where there is a ready market for the goods, the
extent of damages is to be ascertained by the
difference between the contract price and the
market price at the date of the breach.
▫ Where the goods do not have a ready market, the
measure of damages will be the estimated loss
directly and naturally arising, in the ordinary
course of events, from the breach of contract.
Rights against the buyer
• Suit for damages for repudiation of contract before
the due date of delivery of goods.
▫ Illustration: Hira agreed to sell to Mira 20 bags of jute
at the rate of Rs. 100 per bag. According to the
contract, the jute was delivered on 1st January 2016.
However, before this date, Mira informed Hira that
she will not accept any jute from Hira. Since Mira
refused, Hira sold the bags of jute to Jira at the rate of
Rs. 90 prer bag; as this was the prevailing market
price.In this case, Hira can file a suit against Mira for
the recovery of damages of Rs. 10 per bag, as Hira had
to suffer a loss to that extent.
• Suit for interest and special damages.
Buyer's Remedies Against Seller
• Suit for damages for non-delivery of goods.
• Suit for specific performance.
• Suit for breach of warranty.
• Repudiation of contract before the due date.
• Interest by way of damages
References
• Gogna P.P.S. (1999): A Text book of Mercantile
Law, S.Chand & Co.
• Tulsian P.C. (2007): Business Law, Tata
McGraw Hill, New Delhi.
• www.helplinelaw.com
• www.consumer-law.lawyers.com
• http://vle.du.ac.in/mod/book/view.php?id=959
7&chapterid=15169