Contract- II

Topic- Right of Stoppage in Transit

PPT-4
-BY-
Neha Sharma
Assistant Professor
National Law Institute University
Bhopal
 Right of Stoppage in Transit

 Right of stoppage in transit means

a legal right of a seller of the
goods to stop the goods in transit
before
the buyer receives them, especially 
where it becomes clear that
the buyer cannot pay for the goods
i. e. when he has become insolvent.
 Right of Stoppage in Transit

 Section 50 of the Sale of Goods Act,1930

provides that- 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.
 Right of Stoppage in Transit

 When the unpaid seller deliver the

goods to a carrier for transmission
to the buyer the unpaid seller
normally looses his right of lien.
 Seller may exercise his right of
stoppage and resume his lien( or
acquire a lien, if had no lien earlier)
if the buyer becomes insolvent while
the goods are in transit.
 Right of Stoppage in Transit

 The exercise of the right of stoppage

in transit does not mean that the
seller cancels the sale or that the
property re-vest in him. The seller
gets the right to repossess the
goods.
 After repossessing the goods the
seller is bound to deliver the goods if
the price is paid or tendered within a
reasonable time.
 Right of Stoppage in Transit and
lien: Difference

Lien Stoppage in transit

• The essence is to retain • The essence is to regain
possession. possession.
• Seller’s possession of the • Seller must part with the
goods is essential. possession of goods.
• The right can be exercised • This right cannot be
even if the buyer is not exercised unless the buyer
insolvent. is insolvent.
• When this right ends, the • This right begins when the
right to stop in transit right to lien ends.
begins.