RIGHTS OF UNPAID SELLER AGAINST GOODS

Rights of Unpaid Seller Against Goods in India

The rights of an unpaid seller against goods in India are safeguarded by various legal provisions to ensure fair dealings and protection of interests. When a seller has not received the due payment for goods sold, they retain certain rights over those goods until payment is received. These rights empower the seller to recover the outstanding amount and protect their commercial interests.

Key Points:

1. Right of Lien: The unpaid seller has the right to retain possession of the goods until payment or tender of payment is made by the buyer. This right applies even if the seller has delivered the goods to a carrier or a bailee for transmission to the buyer.
2. Right of Stoppage in Transit: If the seller learns that the buyer has become insolvent and the goods are still in transit, the unpaid seller can stop the goods while they are in transit and resume possession until payment is received. This right is particularly crucial in cases of buyer insolvency to prevent loss to the seller.
3. Right of Resale: In certain circumstances, the unpaid seller can resell the goods after giving reasonable notice to the buyer. This right arises when the buyer defaults in payment, and the seller has exercised the right of lien or stoppage in transit. The seller can sell the goods in any reasonable manner and recover the amount due from the proceeds of the sale.
4. Right to Sue for Damages: If the buyer wrongfully neglects or refuses to pay for the goods, the unpaid seller can sue the buyer for the price of the goods, along with any damages suffered due to the breach of contract.
5. Right to Sue for the Price: The unpaid seller can sue the buyer for the price of the goods if:
   • The property in the goods has passed to the buyer
   • The buyer has become insolvent before paying for the goods, and the seller has the right of lien or stoppage in transit
   • The goods were sold on credit, and the buyer has defaulted in payment
6. Right of Rejection: If the buyer defaults in payment and the seller has not yet delivered the goods to the carrier or bailee, the seller can refuse to deliver the goods to the buyer.
7. Right of Rescission: In cases where the goods have been delivered to the buyer on credit, and the seller learns of the buyer’s insolvency, the seller can rescind the contract and take back the goods.
8. Right to Claim Interest: The seller may claim interest on the unpaid amount if there is a stipulation for interest in the contract or if it is a customary trade practice.

These rights provide a comprehensive framework to protect the interests of unpaid sellers in India, ensuring that they have recourse in case of non-payment or default by the buyer. By exercising these rights judiciously, sellers can mitigate losses and uphold the integrity of commercial transactions.