What is Meant by Unpaid Seller? A seller is a person who sells or agrees to sell goods and deemed to be an unpaid seller within the meaning of this Act.
i. When the whole of the price has not been paid or tendered:
ii. When a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of dishonor of the instrument or otherwise. Sec.45.
So an unpaid seller means the person who has sold the goods for a price and the payment of price has not been made to him or the instrument which was given to him has been dishonored in its maturity. Such seller is known as an unpaid seller.
RIGHTS OF AN UNPAID SELLER
According to section 46, the seller who has sold the property in goods to the buyer has the following rights against the goods when the whole of the price or a part of the price is not paid by the buyer;
(a) a lien on the goods for the price while he is in possession of them:
(b) in case of insolvency of the buyer a right of stopping the goods in transit after he has parted with the possession of them;
(c) a right of resale as limited by this Act.
(A) UNPAID SELLER’S LIEN
Subject to the provision of The Sale Of Goods Act the unpaid seller of the goods who is in possession of them is entitled to retain possession of them until the price is not paid or tendered in the following case;
Where the goods have been sold without any stipulation as to credit.
Illustration; A sells his car to B for Rs. 5000 to be paid in cash. But B fails to make payment A can retain the possession, (car)
Where the goods have been sold for credit and the terms Of credit have expired,
Where the buyer becomes insolvent,
If the seller has made partial delivery of the goods, he may exercise his right of lien over the undelivered goods unless he has waived his right of lien.
TERMINATION OF UNPAID SELLER’S LIEN
According to section 49 of The Sale of Goods Act, the unpaid seller of the goods loses his right to a lien thereon in the following cases:
(a) 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 the goods.
(b) When the buyer or his agent lawfully obtains possession of the goods.
(c) By waiver thereof (When he himself waives his right of lien).
(B) RIGHT OF STOPPAGE IN TRANSIT
The unpaid seller who has parted with the possession of goods has the right of stopping them in transit that is to say 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. In order to do so, the following conditions must be fulfilled.
(i) that the buyer has become insolvent.
(ii) That the goods are still in the course of transit.
The goods are deemed to be in course of transit from the time when they are delivered to the buyer until the buyer or his agent in that behalf takes delivery of them from such carrier or from another bailee. Sec.51.
(C) RIGHT OF RE-SALE
The unpaid seller has also the right that following conditions are fulfilled.
1. The goods must be of perishable nature.
2. The unpaid seller must have given the notice to the buyer of his intention to resale.
3. The unpaid seller has exercised his right of lien or stoppage in transit.
4. The buyer has not within the reasonable time paid or tendered the price.