Rights of Unpaid Seller Against Goods

Introduction: Rights of Unpaid Seller Against Goods

In the realm of commerce, the dynamics between buyer and seller are governed by contractual obligations, where the exchange of goods for a specified sum is the cornerstone. Embedded within this contractual framework are reciprocal promises, as mandated by Section 2(f) of the Indian Contract Act. This reciprocal promise entails the vendor’s duty to transfer the sold products and the buyer’s obligation to remit the agreed-upon amount. Herein lies the essence of the buyer-seller relationship, encapsulated in the phrase “Rights of Unpaid Seller against Goods.”

But who exactly qualifies as an unpaid seller? An unpaid seller emerges when the entirety of the value remains outstanding or when a financial instrument, such as a bill of exchange, intended for payment, fails due to dishonor.

Understanding the Rights of Unpaid Seller

The Sale of Goods Act, 1930, meticulously delineates the rights afforded to an unpaid seller. Section 45 of the Act offers a comprehensive definition of an unpaid seller, encompassing scenarios where payment is either incomplete or conditional instruments are dishonored.

Section 46: Unveiling the Arsenal of Rights

Section 46 of the Sale of Goods Act unfurls a suite of rights at the disposal of an unpaid seller. Chief among these is the right of lien, conferring upon the seller a legal claim over the goods until full payment is received. Furthermore, in the event of buyer insolvency, the seller retains the prerogative to halt goods in transit after relinquishing possession.

Case in Point: Ram Saran Das Raja Ram and Anr. Vs Lala Ram Chander

The landmark case of Ram Saran Das Raja Ram and Anr. Vs Lala Ram Chander illustrates the practical application of these legal provisions. Notably, when a contract expressly stipulates a right of resale in the event of buyer default, the original contract is deemed rescinded upon resale. However, this does not preclude the seller from seeking damages for breach under the law.

Conclusion: Rights of Unpaid Seller Against Goods

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FAQs: Rights of an Unpaid Seller against Goods

Q1: Who qualifies as an unpaid seller under the Indian Contract Act?

Answer: An unpaid seller is defined under Section 45 of the Sale of Goods Act, 1930, as someone to whom the full value of the goods has not been paid or tendered, or when a bill of exchange or similar instrument has been received but not honored.

Q2: What rights does an unpaid seller have against goods?

Answer: An unpaid seller possesses several rights against goods, including:

  • Lien on the goods for the value in their possession.
  • Right to stop goods in transit in case of buyer insolvency.
  • Right of resale under specific conditions, as outlined in Section 46 of the Sale of Goods Act, 1930.

FAQ 3: What legal precedents support the rights of unpaid sellers?

Answer: The case of Ram Saran Das Raja Ram vs. Lala Ram Chander (1967) elucidates the rights of an unpaid seller, particularly regarding the reservation of a right of resale in case of buyer default. Section 46 of the Sale of Goods Act, 1930, further solidifies the unpaid seller’s rights, even if the property in the goods has passed to the buyer.

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