Rights of an Unpaid Seller

The rights of an unpaid seller are classified as following

1.Rights of an unpaid seller against the goods; and

2.Rights of an unpaid seller against the buyer.

(1) Unpaid Seller’s Rights Against the Goods

When an unpaid seller has transferred ownership
rights to the buyer, he has the following rights against the goods:

(1) Right of Lien (Sees. 47 to 49). Such unpaid seller, who is in possession of goods is entitled to retain possession of goods until payment of price in the following cases:

1.Where the goods have been sold without any stipulation as to credit,

The seller may exercise his right of lien, not with-
standing that he is in possession of the goods as agent or bailee for the buyer.

2.Where the goods have been sold on credit, but the term of credit has expired and

3.Where the buyer has become insolvent.

Lien in Case of Partial Delivery: As per Sec. 48 of
the Sale of Goods Act, if the unpaid seller has given partial delivery of the goods, he shall then be entitled to hold lien on the remaining goods with him. It is worth mention here that the right of lien is a personal right. It cannot be transferred to any other or third person.

Moreover, it is also to be considered that the unpaid seller’s lien is on the total goods kept with him, even if the buyer had paid some part of its price to the seller.

Termination of Lien: In the following conditions,
the unpaid seller loses his right of lien on the goods:

1.When, with the object of goods reaching the buyer, the goods is entrusted to the carrier or the bailee, and  doesn’t hold the right of disposal of goods;

2.When the buyer or his representative legally acquires the goods;

3.When the seller gives up his right of lien;

4.When, by his act or behaviour, the seller convinces that he has no lien on the goods;

5.When, the seller doesn’t give the delivery of the
goods, the contract of sale itself shall be considered to have been terminated.

(2) Right of Stoppage of Goods in Transit (Sees. 50 to 52). Sec. 50 of the Sale of Goods Act holds that when the buyer of goods becomes insolvent, the unpaid seller who has parted with the possession of goods, has a right of stopping it in transit. He may resume possession of goods as long as it is in the course of transit and may retain it until the payment of price. Piste

Duration of Transit- Goods are deemed to be in the course of transit from the time when it is delivered to a carrier or any other bailee for the purpose of transmission to the buyer, until the buyer or his agent, in that behalf takes delivery of it from such a bailee or the carrier. If the buyer or his agent obtains delivery of the goods before its arrival at the destination, the transit comes to an  end.

Moreover, if after the arrival of goods at the appointed destination, the carrier or any other bailee acknowledges to the buyer or his agent that he holds the goods on his behalf and continues to be in possession of goods as bailee for the buyer or as his agent, the transit comes to an end. However, the buyer may indicate a further destination.

However, in case the goods is rejected by the buyer and the carrier or any other bailee continues in possession of it, the transit is not deemed to have come to an end.

Further, where the bailee or the carrier wrongfully refuses to deliver the goods to the buyer or his agent, the transit is deemed to have ended. It is important to mention that where part delivery of goods has been made to the buyer or his agent, the remainder of the goods may be stopped in transit, unless such part delivery has been given in such circumstances as to show agreement to give the possession of the whole of the goods.

Effecting the Stoppage of Goods in Transit- The unpaid seller may exercise his right of stoppage in transit either by taking actual possession of the goods or by giving notice of his claim to the carrier or any other bailee having possession of goods. When notice of stoppage in transit is given by the seller to the carrier or any other bailee in possession of goods, he shall re-deliver the goods to the seller. The expenses of such re-delivery shall be borne by the seller.

(3) Right of Re-Sale (Sec. 54)- As a matter of rule,
once the property has passed on to the buyer, it cannot be reverted to the seller. But, under Sec. 54 of the  Sale of Goods Act, the unpaid seller may have a limited right of re-sale in the following cases:

1.When the goods is of a perishable nature; and

2.When the buyer doesn’t pay the price within a reasonable time after receiving the notice from the unpaid seller of his intention to sell off the goods, the unpaid seller may re-sell the goods and may retain the profit on such re-sale. He can also recover any loss that he incurs on re-sale.

When an unpaid seller who has exercised his rights of lien or stoppage of goods in transit, re-sells the goods,the buyer acquires a good title thereto as against the original buyer.

(4) Right to Detain the Delivery of Goods- If the ownership of goods has been transferred to the buyer but the prosession of goods has nlt been transferred to the buyer the unpaid seller mqy deyain the delivery of the good.