Chapter 20 : Rights of Unpaid Seller

Chap 20- rights of unpaid seller The seller of the goods is defines as an unpaid seller if a) when the price is not received by the seller b) when bill of exchange or negotiable instrument received as conditional pyment has been dishonoured this definition emphasis the characteristics of unpaid seller as : He must sell the goods on cash terms and not on credit He must be unpaid wholly or partly. Even if a portion of price remains unpaid, he is deemed as unpaid seller. When the price paid through bill of exchange or negotiable instrument, the same is dishonoured. He must not refuse to accept the payment when tendered by the buyer. If the seller wrongfully refuses the payment from the buyer, he is not considered as unpaid seller. An unpaid seller has two fold rights viz.; Rights of unpaid seller against goods Rights of unpaid seller against buyer (personally) Rights against goods : an unpaid seller has the following rights against goods, notwithstanding the fact that property in the goods is passes to the buyer. Right of lien : lien is the right to retain possession of goods and refuse to deliver them to the buyer until the price for them is paid . An unpaid seller can exercise his right of lien in the following cases: where goods have not been sold on credit When he delivers goods to carrier or bailee for purpose of transfer to the buyer When the buyer lawfully obtains the possession of the goods When seller expressively waives his right of lien Right of stoppage of goods in transit : it means right of stoppage of further transit of goods while they are with the carrier for transmission to the buyer. It entitles the seller to regain possession, when the seller has parted with the possession of the goods. The buyer becomes insolvent When property in the goods is been transferred to the buyer When the goods are in course of transit i.e the goods are neither with the buyer nor with the seller. They are in custody of the carrier who is in charge for transmission of goods to the buyer. When buyer or his agent takes delivery after the goods have reached destination When buyer or his agent takes delivery before the goods have reached destination. When goods have reached the destination and the carrier acknowledges the buyer that he holds the goods on his behalf When buyer requests the carrier to carry the goods to further some new destination and carrier agrees When part delivery of the goods is made to the buyer with the intention to deliver the goods wholly. Right of resale : this is a very valuable right on the part of unpaid seller. An unpaid seller can exercise this right when The goods are of perishable nature Where such a right is expressly reserved in the contract in case buyer makes a default Where seller has given the notice about his intention to resale the goods Rights against buyer personally : Suit for price : when the property in goods has passed to the buyer and price is agreed to be payable on a certain date or property is not passed to the buyer but he wrongfully refuses to pay the price, the seller is entitled to sue the buyer for recovery of the price. He can file a suit against the seller if goods are manufactured to some special order but buyer refuses to pay for the same. Suit for damages for non-acceptance : where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller can sue him for non acceptance. The seller in this case can only file a suit for damages and not the claim of full price of goods. Suit for special damages and interest : it entitles the seller to sue the buyer for special damages and also such damages which were known to the parties that would occur on the breach of contract. It also gives the unpaid seller a right to get interest on reasonable price on the total unpaid amount from the time it was due till the time it was actually paid. Actual delivery : when the goods are physically handed over by the seller or his agent to the buyer or his agent, the delivery is said to be actual delivery. Eg – the seller hands over the car to the buyer is actual delivery Symbolic delivery : here a token acting as symbol for delivery is passed to the buyer. The means of obtaining possession of goods is transferred to the buyer not the actual goods. Eg- the seller hands over the key of the car to the buyer. Constructive delivery : such a delivery takes place when the person in possession the goods on the seller’s orders is holding the goods on behalf of the buyer. Eg- seller hands over the delivery of goods to the warehouse keeper who is then holding the goods for the buyer. Rules as to delivery of the goods Delivery maybe actual or symbolic : the delivery of the goods sold must be actual, symbolic or constructive delivery. Delivery and payment are concurrent : the seller should be ready and willing to deliver the goods and the buyer in exchange shall be ready and willing to pay the price for the same . Effect of delivery : when a part of goods has been delivered with the intension of wholly transferring the goods to the buyer, the rest part of delivery is also deemed as complete. Time of delivery: the seller is bound to send the goods to the buyer under the contract of sale, but when no time is decided the seller shall send the goods in reasonable time. Further if the buyer demands the delivery it also should be done in reasonable hours. Expenses for delivery : the expns and incidental of putting the goods into a deliverable state shall be borne by the seller Chapter 19 Performance of contract of sale It is the duty of the seller to deliver the goods and of the buyer to accept the goods and pay for them in accordance with the terms of the contract of sale. Delivery : Delivery means voluntary transfer of possession of goods from one person to another. If the possession is not voluntarily transferred, then there is no delivery. Modes of delivery Suit for damages of non delivery – where the seller wrongfully refuses or neglects the delivery of the goods to the buyer, the buyer may sue the seller for damages of non delivery of the goods. The measure of damages shall be estimated loss incurred directly or naturally on part of buyer due to breach of contract. The buyer here is entitled to claim for special damages too for the loss which the seller knew would occur on breach of contract. Suit for special performance : when there is breach of contract for sale of specific or ascertained goods, the buyer may file a suit for specific performance of the contract. This is only possible when the nominal damages are not an adequate remedy eg- rare paintings. Suit for damages for breach of warranty : when there is breach of warranty by the seller, the buyer may file a suit for damages if price is been paid. But if the price is not paid, buyer may ask for reduction in price. Suit for recession of contract and damages for breach of condition : the breach of condition entitles the contract as repudiated. The buyer can file a suit for recession of the contract, and also claim for damages suffered. Suit for recovery of price and interest : if the buyer has paid the price of the goods and the goods are not delivered, he can sue the seller for refund of price along with reasonable interest from date of payment till date of refund . Place of delivery : the goods must be delivered at the place stated upon in the contract. But if there is no place mentioned, the goods are to be delivered at the place at which they are at the time of sale or agreement to sale.