Rights of Unpaid seller

Rights of Unpaid seller against the goods

As per Section 2(f) of the Indian Contract Act, the vendor must transfer the products sold, and therefore the buyer must pay the specified amount reciprocally, under the contract of sale by them. This is known as Reciprocal Promise. In other words, any set of promises made which forms the consideration or an area of consideration for every other are called reciprocal promises and each contract of sale of goods consists of reciprocal promises.

  • Who is an Unpaid seller?

An unpaid seller is one to whom the entire worth has not been paid or a bill of exchange or such other legal document given to him has been dishonoured.

  • What are the rights of an unpaid seller against the goods?

An unpaid seller can exercise his right of resale under the subsequent conditions: He can claim damages from the first buyer albeit he doesn’t provide a notice of resale to him. Property within the products has not passed to the buyer:

The unpaid seller can exercise his right of withholding delivery of products.

  • Section 45 within the Sale of products Act, 1930

45. “Unpaid seller” defined. —

(1) the vendor of products is deemed to be an “unpaid seller” within the meaning of this Act—

(a) when the entire of the worth has not been paid or tendered;

(b) when a bill of exchange or other legal instrument has been received as conditional payment, and thus the condition on which it had been received has not been fulfilled by reason of the dishonour of the instrument or otherwise.

(2) during this Chapter, the term “seller” includes an individual who is within the position of a seller, as, as an example, an agent of the seller to whom the bill of lading has been endorsed, or a consignor or agent who has himself paid, or is directly responsible for, the price.

  • Section 46 within the Sale of products Act, 1930

46. Unpaid seller’s rights. —

(1) Subject to the provisions of this Act and of any law for the nonce effective, notwithstanding that the property within the goods may have passed to the buyer, the unpaid seller of products, as such, has by implication of law—

(a) a lien on the products for the worth he’s in possession of them;

(b) just in case of the insolvency of the customer a right of stopping the products in transit after he has

parted with the possession of them;

(c) a right of resale as limited by this Act.

(2) Where the property in goods has not passed to the customer, the unpaid seller has, additionally to his other remedies, a right of withholding delivery almost like and coextensive alongside his rights of lien and stoppage in transit where the property has passed to the customer.

  • Case law

Ram Saran Das Raja Ram and Anr. Vs Lala Ram Chander, 5th May 1967 

In the case of a contract which expressly reserves a right of re-sale on buyers default, when the goods are re-sold on such default, the original contract is thereby rescinded, but this does onto prejudice any claim for damages which the seller may have under the law. Section 60 of the Act, dealing with the repudiates of the contract before due date provides that when either party to a contract of sale repudiates the same before the date of delivery, the party may either treat the contract as subsisting and wait till the date of delivery or he may treat the contract rescinded and sue damages for the breach. Here, reference may also be made to Section 46 of the Sales of Goods Act, 1930, which deals with the subject of unpaid sellers. According to this section of the subject to these provisions of the act and any law for the time being in force, withstanding that the property in the goods may have passed to the buyer i.e., the unpaid seller of goods. 

Author: Madhvi Patidar

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