RIGHTS OF UNPAID SELLER

Unpaid seller
a) Whole of the price not paid/tendered
b) B.E./other N.I. received as conditional payment,
c) But not yet fulfilled due to dishonour of the instruments
d) Seller can be agent of seller endorsed/consigner or agent who paid personally or directly
responsible for price
S .46- unpaid sellers right
1. Right of lien when goods are possessed
2. Right to stoppage in transit, when buyer is insolvent & parted the possession
3. Right to resale
4. Right to withhold delivery
- These are applicable, only if property has passed
- If property not passed except 1, all the other rights are available
I) S.47- UNPAID SELLERS LIEN
Right to retain the goods until the payment of price/tender of price-
1. Possession of goods
2. Goods sold w/o stipulations as to price
3. Goods sold in credit, but the term of credit expired
4. Buyer is insolvent
5. Irrespective o f whether he is agent/bailee of buyer
-It is for the actual possession of goods, so doesnt effect if he has parted with the
documents as to title
It applies only to price and not to wharfingers charge/carrier charge and all
Right of lien is lost if the documents are endorsed to any 3rd party.
s.48- part delivery
Unless an agreement to contrary exist
If part delivery is done
Right of lien exist in reminder of goods
- Installment deliveries- no right of lien unless the buyer becomes insolvent
s.49- Termination of Lien
1) Delivers goods to agent/carrier/bailee for transmission of goods to buyer w/o reserving
the right of disposal
2) Buyer/his agent lawfully obtains the possession of goods
3) Waiver
4) No loss even if obtained a decree for price
Valpy v. Gibson, 1847 -Goods were sold & sent at the request of buyers to their agents by seller
& put on board- Took them back for some repacking-Buyers became insolvent-Sellers tried to
impose their lien right- No reservation as to right of disposal was made-Held: Lien right was lost.
II) RIGHT TO STOPPAGE IN TRANSIT -S.50
 Subject to provisions of the Act
Buyer becomes insolvent
Seller parted with possession
Goods in transit
Unpaid seller has
- right to stoppage & resume possession
- right to retain till the payment/tender of price
Question of transit- depends upon facts- the person taking the goods for transit should not be
an agent of buyer/seller because, if sellers goods means its his own, & if buyers goods then
possession belongs to the buyer- So, it should be only be carried by an independent
contractor i.e., just a bailee or middleman not any ones agent or so.
s.51- duration of transit
Course of transit = delivered to a carrier/bailee until the buyer/his agent has taken the
delivery
goods rejected by buyer & carrier/agent continues possession, goods in transit even if
seller refused to take the delivery
If carrier/bailee refuse wrongfully to deliver the goods to buyer, the transit ends
Part delivery- right can be exercised in rest of the goods
Great indian peninsula rly co v. Hanmanndas, 1889,bom hc -Goods in G.I.P.Ry.Co-----
to buyer-Co. delivered and buyer loaded it into his cart- Cart had not left the railway
compound-Telegram send to stop the goods-Co. didnt do the same-Seller sued the Ry.
Co for damages-HELD: As soon as the goods were handed to buyer-transit ended, so Ry.
Co has no power to stop
Ex parte golding Davis & co, 1883, ch. D -The case was with reagrd to delivery of
drums at liverpool- buyer resold it to sub buyer at New york when the ship was in
liverpool, buyer became insolvent- w/o paying the bill of lading was send to the sub
buyer but goods were not yet delivered to him- it was held tht d delivery s not yet
completed as this was in pursunace of same journey only so, the seller has the right to
stop even the passing off property happend
s.52- how stoppage in transit is effected
By taking actual possession
By giving notice to the carrier/other bailee and
Notice also to buyer/his agent- so that the P can within reasonable time notify
agent/servant to prevent delivery
When notice is given- expenses for redelivery shall be borne by the seller himself
Redelivery to be done by the carrier/agent to seller/as per directions
s.53- Right to Resell- effect of sub-sale/pledge by buyer
Unpaid sellers lien/ stoppage in transit
not affected by the sub sale by buyer
Unless seller agreed for the contrary
 proviso:
-if document to title is transferred to a person & he transfers to other
person
- this is again transferred to one who believes un good faith & for
consideration in sale- unpaid sellers right is lost
-if pledge/other disposition- unpaid sellers right is subject to rights of
transferee
Mordaunt Bros . V. The British Oil & Cakes Mills Ltd, 1910,KB - The D had contract
for delivery of oils to Mr. Merchant, who asked them to deliver it to P, to whom
merchants have sold it. Merchant were to pay for the same- they paid for some time as
agreed- later they defaulted , these people started to exercise lien over the goods-Even
though they used to put the name of sub buyer in register as the buyers, the orders were
placed only by the merchants & also the they made payment & delivery to sub buyers
was deemed to be that of merchants only so there was nothing to show they have
renounced their right because the sub sale is taking place, only after it does to the original
buyer which is subject to sellers right only .
III. RIGHT OF RESALE- S.54
Contract of sale is not rescinded merely because of unpaid sellers lien/right to stoppage
in transit
An unpaid seller may resell the goods & take the damages within reasonable time, if-
1. goods are perishable in nature
2. he exercised right of lien/stoppage in transit, but still not been paid
- Buyer will not be entitled to any profits
- Due notice to be given to buyer
- Subsequent buyer in such cases gets good title to goods
- If right to disposal is reserved, buyer makes default the sale contract is rescinded
R V Ward Ltd v. Bignall, 1967,QB -VANGUARD & ZODIAC- 850- Buyer gave -
25 as deposit- failed to pay- Reasonable notice was given- He could resell only Vanguard
-So claimed damages for price of zodiac & also advertising charge- 475( 359 + 22)-
Held: when he exercises his resell right, the property is deeded as his own, so he cannot
claim money for Zodiac, but only shortfall while selling Vanguard & advertising charges
Question?
J co. Sold some quantity of citric acid crystals to P who resold it to M & B
Later, due to bad quality of crystals, the P rejected the goods
J co. said they will refund price & send a cheque to M & B
The cheque bounced
Can M & B retain the goods as unpaid seller till the refund was made?
Answer: No for retaining possession is necessary