Prahladrai Dalmia Lions College of Commerce and Economics

7/31/2019 Prahladrai Dalmia Lions College of Commerce and Economics

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We are very grateful to lot of people for guiding and

helping us in the right direction throughout our project.

First of all, we would like to thank PROF.PREETI for

giving us a wonderful opportunity to do the project On

UNPAID SELLER.

Lastly, we would like to thank our group members for

their participation in the project.

Thank you...


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PROJECT ON:

UNPAID SELLER

SUBMITTED TO:

Prof. PREETI

SUBMITTED BY:

NAME ROLL NO:

Pratik dave 20

Jatin jani 45


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UNPAID SELLER

Who is an unpaid seller? (sec.45)

An unpaid seller is one who has not been paid or tendered the whole of the price or

one who receives a bill of exchange or other negotiable instrument as conditional

payment and the condition on which it was received has not been fulfilled by reason

of the dishonor of the instrument or otherwise.

The term seller include any person who is in the position of a seller ,for example, anagent 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. A seller who has

been partly paid is also considered as an unpaid seller for part unpaid .Therefore,

unpaid seller is one who

Has not received the whole of the price; He has received payment in the form of bill of exchange or negotiable

instrument which is dishonored.

RIGHTS OF AN UNPAID SELLER

The rights of an unpaid seller can be studied under two heads:

when the property in the goods has passed to the buyer when the property in the goods has not passed to the buyer

Sec46(1) lays down that notwithstanding that the property in the goods may have

passed to the buyer ,the unpaid seller of goods, as such as by implication of law-

A lien on the goods for the price while he is in possession of them; In case of the insolvency of the buyer, a right of stopping the goods in transit

after he has parted with the possession of them;

A right of re-sale.


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1). Right of Lien (sec.47)

Meaning of lien: Right of lien means right to retain the possession of the goods or

property until the claim is paid or satisfied. A lien, therefore, is a right of any one

person to retain that, which is in his possession, belonging to another, until certaindemands of a person in possession are satisfied. Possession is essential to create a

right of lien. It must be rightful and continuous. Lien may arise by:

statute; expressed or implied contract; and In ordinary course of dealings.

Lien is of two kinds:

General lien; Particular or specific lien.

General lien means the right to retain the goods until all the claims of the holder

are satisfied. It is a right of retention of goods not only towards the demands

arising out of the article in possession but for general balance of account in favor

of the holder.

Particular lien means the right to retain the particular goods until claims arising

on those goods are satisfied. Particular lien is attached to specific goods for theunpaid price or claim thereof.

Right of lien as applicable to unpaid seller: The unpaid seller of goods, who is in

possession of them, is entitled to retain possession of them until payment or

tender of the price in the following cases:

Where the goods have been sold without any stipulation as to credit. Where the goods have been sold on credit and the term of credit has

expired. Therefore, during currency of credit right cannot be exercised. Where the buyer becomes insolvent and the seller is in possession of the

goods.


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When is the right of lien lost? Termination of lien :(sec.49)

The unpaid sellers lien is lost under the following circumstances: when he delivers the goods to a carrier or other bailee for the purpose of

transmission to the buyer without reserving the right of disposal of thegoods;

when the buyer or his agent lawfully obtains possession of the goods; When the seller waives his right of lien.

Waiver may be done expressly or by implication. It is an implied waiver when

the seller assents to a sub-sale by the buyer.

2). Right of Stoppage in Transit(sec.50)

When the buyer of goods becomes insolvent, the unpaid seller who has parted with

the possession of the goods has the right of stopping them in transit, that is to sale,

he may resume possession of the goods as long as they are in the course of transit

and may retain them until payment or tender of the price.

Meaning of Transit:

Transit does not mean that the goods should be in motion. If the goods are delivered

to the carrier or other bailee by the seller the transit is commenced and it comes to an

end when the buyer acquires possession thereof. Therefore, when goods are in the

hands of a middle man, goods are said to be in transit. Even if the goods arrive at the

destination of the buyers the transit continue until the buyer obtains possession from

the middle man. When the right of lien ends, right of stoppage in transit begins.

If the buyer becomes insolvent after the unpaid seller as parted with possession of

the goods, the unpaid seller can resume the possession of goods by exercising his

rights of stoppage in transit. In order that the seller may be exercise his right ofstoppage in transit, following essentials must be present:


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Essentials:

The seller must be unpaid wholly or partly; The buyer must have become insolvent;

The goods must be in transit, for example, the seller must have parted with thepossession of the goods and the buyer must not have receive the goods

Duration of transit (sec.51):

Goods are deemed to be in course of transit from the time when they are deliver to

carrier or other bailee for the purpose of transmission to the buyer, until the buyer or

his agent in that behalf take delivery of them from such carrier or other bailee.

The transit begins from the time when the seller parts with the possession of the

goods and comes to an ends when the buyer acquires possession thereof. When thebuyer acquire possession of the goods, the right of seller to effect stoppage in transit

to an end.

When does transit of goods come to an end?

The transit of goods comes to an end when the buyer buyer acquires possession. The

buyer acquires possession or is deemed to acquire possession of the goods under

following circumstances:

When the buyer takes delivery of the goods from the carrier or other bailee When the buyer or his agent in that behalf obtains delivery of the goods before

their arrival at the appointed destination. This is done in anticipation by the

buyer or the seller exercising his right of stoppage in transit.

When the carrier or bailee on arrival of the goods at the appointed destination,acknowledges to the buyer or his agents that he holds the good on his behalf

and continuous in possession of them as bailee for the buyer or his agent.

When buyer refuses the goods:If the goods are rejected by the buyer and the carrier or the bailee

continues in possession of them, the transit is not deemed to be at an end, even

if the seller has refused to receive them back. When the buyer does not accept

the goods, the transit continues.


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How is stoppage in transit affected? (sec.52):

The right of stoppage may be effected by unpaid seller in any of the following

ways: By taking actual possession of the goods; or By giving notice of his claim to the carrier or other bailee in whose

possession the goods are, to re-deliver the goods to the seller or

according to his direction.

When is right of stoppage in transit lost?

The right of stoppage in lost under following circumstances:

If the buyer or his agent obtains the delivery of goods from carrier orother bailee; or

If after arrival of the goods at the appointed destination, the carrier orother bailee acknowledges to the buyer that he holds the goods on his

behalf;

If the carrier or other bailee wrongfully refuses to deliver the goods tothe buyer or his agent;

Where a part delivery of the goods has been made to the buyer or hisagent in that behalf, in such circumstances as to show an agreement to

give up possession of the whole of the goods.

Unpaid seller lien and right of stoppage in transit distinguished:

Right of lien can be exercised by the seller if the buyer does not pay,though he is able to pay. The right of stoppage in transit can be

exercised by the seller only when the buyer becomes insolvent.

The right of lien ends with the parting of possession of the goods.Right of stoppage in transit commences with the parting of possession

of the goods by the seller and continues until the buyer acquires the

possession of the goods.

Right of lien is to retain possession. Right of stoppage in transit is tolien the possession.


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3). Right of Re-sale (Sec.54)

When the unpaid seller has exercise his right of lien on his retaining the possession

of the goods or resumes possession of the goods by exercising his rights of stoppage

in transit upon insolvency of the buyer, he can re-sale the goods under the followingcircumstances:

Where the goods are of perishable nature; Where the seller gives notice to the buyer of his intention to re-sale the

goods(no notice is necessary in case of perishable goods);and the buyer does

not pay or tender the price within a reasonable time after the notice;

Where the seller ha expressly reserved his right of re-sale in case the buyermakes default.

The seller can hold the buyer responsible for loss suffered due to breach of contract.

If on re-sale, the unpaid seller receives any profit, and he has given notice to the

buyer of resale, the unpaid seller is entitled to retain his profits.

However, when the unpaid seller has not given notice to the buyer, then he

losses his right to recover damages from the buyer and also has to pay the profits to

the buyer arising from the re-sale. if however, in a re-sale, there is loss to the seller,

he can claim it from the buyer as a damages for the breach of contract. No notice is

necessary where the seller has expressly reserve the right of re-sale in case the priceis not paid. The purchaser from the unpaid seller gets an absolute and good title to

the goods as against the original buyer, even if the seller has failed to give notice to

buyer of his intention of re-sale.

Where the seller expressly reserves a right in case the buyer should make

default,and,on the buyer, making default, re-sale the goods, the original contracts of

sale is thereby rescinded, but without prejudice to any claim which the seller may

have for damages. The goods once again become the property of seller and the

unpaid seller effects the fresh sale as an original owner of the goods. The damagewhich the seller can claim is the difference between the contact price and the market

price at the date of the breach.

THANK YOU

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Prahladrai Dalmia Lions College of Commerce and Economics