When a seller of goods deemed to be an unpaid seller? What are his rights: (i) against the goods and (ii) the buyer?

A seller of goods is an unpaid when the whole of price is not paid, or when a conditional payment was made by a cheque or otherwise, the instrument has been dishonoured. An unpaid seller has the following rights against the goods and against the buyer.

Against the Goods: He has three rights: (i) a lien on the goods in his possession, (ii) a right of stopping the goods in transit, and (iii) a limited right of resale.

Lien. An unpaid seller can refuse to deliver the goods to the buyer until the full payment has been made, provided the goods have been sold without any stipulation as to credit or the goods have been sold on credit, and the term of credit has expired, or the buyer has become insolvent.

The seller’s right of lien is lost 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 goods, or when the buyer or his agent lawfully obtains possession of the goods, or by waiver of his lien.

Stopping in Transit. An unpaid seller has a right of stopping goods in if the buyer becomes insolvent. The goods are in transit until the buyer or his transit agent in that behalf takes delivery of them.

Right of Resale. The unpaid seller may resell (a) where the goods are perishable, (b) where the right to do so is expressly reserved in the contract , (c) where in exercise of right of lien or stoppage in transit the seller gives notice of his inten┬Čtion to resell and the buyer does not pay or tender the price within a reasonable time. If on resale there is a deficiency between the contract price and the amount realised out of the sale, the unpaid seller will be able to recover this from the buyer as damages for the breach.

Against the Buyer. He has the following rights against the buyer (a) he is en┬Čtitles to sue the buyer for the price of the goods, if the property in the goods has already passed to the buyer, (b) he is also entitled to bring an action for damages if the buyer refuses to accept the delivery and pay for them.

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