STOPPAGE IN TRANSITU

(1530; 1531; 1532)

SPECIAL RIGHT OF RESALE

(1533);

RIGHT TO RESCIND (1534)

 STOPPAGE IN TRANSITU

- the legal right of a seller of goods to stop the sale at any

time before receives them
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Requisites for the exercise of right of stoppage in transitu:

 Seller must be unpaid

 Buyer must be insolvent (Art. 1530)
 Goods must be in transit (Art. 1531)
 Seller must actually take possession of the goods sold or give notice of his
claim to the carrier or other person in possession. (Art. 1531,par.1)
 Seller must surrender the document of title, if any, issues by the carrier or
bailee;
 Seller must bear the expenses of delivery after the exercise of the right
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Buyer Must Be Insolvent

(Art. 1530)

General Rule:
Right of stoppage in transit arises solely when an unpaid seller
has shipped goods to an insolvent buyer.
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Buyer Must Be Insolvent

Example:
S secures a local sale of its goods via J&T Express to B.
S packs the goods into boxes delivers the goods to J&T Express who
arranges for their shipment. S issues invoice for the cost of the
goods and while the goods are in transit, S discovers that B becomes
insolvent and S is unlikely to receive payment of its invoice.
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Goods Must be in Transit

(Art. 1531,par.1.)

1.) After delivery to carrier or other bailee and before the

buyer or his agent takes delivery of them;

Example: S ships a truckload of beauty products on July3 to B

who is located 2,000 miles away. The beauty products arrive at
B’s location on July 6.
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Goods Must be in Transit

(Art. 1531,par.1.)

2.) Goods are rejected by buyer, and carrier or bailee

continues to be in possession of them, even if seller refused to
received them back.
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Goods are considered no longer in transit ( Art. 1531, par. 2.)

(1) After delivery to the buyer or his agent in that behalf;

(2) If the buyer or his agent obtains possession of the goods at a
point before the destination originally fixed;
(3) If the carrier or bailee acknowledges to hold the goods on behalf
of the buyer; and
(4) If the carrier or bailee wrongfully refuses to deliver the goods to
the buyer
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( Art. 1531, par. 3.)

If the goods are delivered to a ship, freight train,

truck, or airplane chartered by the buyer, it is a question
depending on the circumstances of the particular case, whether
they are in the possession of the carrier as such or as agent of the
buyer.
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( Art. 1531, par. 4.)

If 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 transitu, unless such part
delivery has been under such circumstances as to
show an agreement with the buyer to give up possession of
the whole of the goods..
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Seller must actually take possession of the goods sold or

give notice of his claim to the carrier or other person in
possession (Art. 1532,par.1)

Ways of exercising the right to stop:

1. By obtaining actual possession of the goods.
2. By giving notice of his claim to the carrier or bailee.
 SPECIAL RIGHT TO RESALE
(Art. 1533)
When Right Exercisable:

• Seller has previously exercised the right of possessory lien or stoppage in

transitu.
• Under any of the following cases:
- the goods are perishable by nature
- right to resell is expressly reserved
- buyer delays in payment for an unreasonable time
 SPECIAL RIGHT TO RESALE

Effects of resale:

• Seller is not liable to for any profit made by such resale

• If sells for less than the price the seller has right to sue for the
balance from buyer
• New buyer acquires a good title as against the original buyer
 SPECIAL RIGHT TO RESALE

Example:

S sold to B a laptop, payable at 5,000 upon delivery and the

balance of 7,000 w/in 30 days. B failed to take delivery of the
laptop and pay the purchase price. S was forced to sell to T for
only 10,000. Is B liable for the difference of 2,000?
 SPECIAL RIGHT TO RESCIND
(Art. 1534)
When Right May Be Exercised:

• Seller has the right of possessory lien or stoppage in transitu.

• Under either of two situations:
- right to rescind is expressly reserved
- when buyer delays in the payment of the price an unreasonable
time
 SPECIAL RIGHT TO RESCIND

Effects of rescission:

• Seller resumes ownership of the goods

• Seller shall not be liable to the buyer upon the contract
• Buyer may be liable for damages for any loss occasioned by the breach of
contract
Thank You and
God Bless