An unpaid seller refers to a party in a sales transaction who has delivered goods to the buyer but has not received the agreed-upon payment or the price for the goods.
According to Section 45 of the Sales of Goods Act,1930, an unpaid seller is characterised as a seller who has not received the complete payment or a portion thereof for the goods. This category extends to individuals acting as sellers, such as agents or consignors.
In the landmark case Liverpool City Council vs Irwin(1976 3 AIR ER 531) addresses the statutory rights of the unpaid seller.
The unpaid seller, as defined in the Sale of Goods Act, possesses several rights until full payment is received for the goods. These rights safeguard the interests of the seller in commercial transactions:
1. Right of Lien:
Definition: The unpaid seller has the right to retain possession of the goods until the full payment is made.
Conditions: The goods must be in the possession of the unpaid seller, and the right of lien is not waived.
2. Right of Stoppage in Transit:
Definition: If the buyer is insolvent, the unpaid seller can stop the goods in transit and resume possession.
Conditions: The goods must be in transit, and the seller must have relinquished possession but not ownership.
3. Right of Resale:
Definition: In case of buyer’s breach, the unpaid seller may resell the goods and hold the defaulting buyer accountable for losses.
Conditions: Resale must occur after reasonable notice to the buyer, the goods must be in possession, and notice may be required by the contract.
4. Suing for Price:
Legal Action: The unpaid seller can initiate legal action to recover the unpaid amount.
5. Damages for Non-Acceptance:
Compensation: The seller can claim compensatory damages for the buyer’s refusal to accept the goods.
6. Claiming Interest:
Interest: The unpaid seller has the right to claim interest on the unpaid amount as per legal provisions. These rights provide a legal framework for the unpaid seller to seek remedies and protect their interests in the event of non-payment or breach of contract by the buyer.
In conclusion, the rights of the unpaid seller, as defined by the legal statutes and reinforced through landmark judgement, play a crucial role in maintaining equilibrium in commercial transactions. This jurisprudence not only ensures fairness but also establishes a foundation for the continued integrity of contractual agreements in the complex landscapes of business dealings.
Done By: Reshma A, 5th year B.Com.,LL.B(Hons.)
SRM University, Kattangulathur
For Origin Law Labs
