RIGHTS OF UNPAID SELLER AGAINST GOODS: LEGAL RIGHTS AND RECOURSE

Rights of Unpaid Seller Against Goods: Legal Rights and Recourse in India

In India, the rights of an unpaid seller against goods are protected under various legal provisions, ensuring recourse for sellers in cases of non-payment by buyers. These rights are crucial for safeguarding the interests of sellers and maintaining the integrity of commercial transactions. Let’s delve into the key points concerning the rights of unpaid sellers in India:

1. Definition of an Unpaid Seller:

• An unpaid seller refers to a person who has sold goods but has not yet received the full payment for them.

2. Right to Withhold Delivery:

• An unpaid seller has the right to withhold delivery of the goods until payment is received in full. This right exists even if the goods have been delivered to the buyer.

3. Right of Lien:

• One of the most important rights of an unpaid seller is the right of lien. This means the seller can retain possession of the goods until payment is made. The right of lien can be exercised not only for the price of the goods sold but also for any incidental charges like storage or transportation.

4. Stoppage in Transit:

• If the seller discovers that the buyer is insolvent, they have the right to stop the goods while they are in transit and resume possession of them. This right helps protect the seller from suffering losses due to the buyer’s insolvency.

5. Right of Resale:

• In situations where the buyer defaults on payment, the unpaid seller has the right to resell the goods. However, this can only be done after giving reasonable notice to the buyer. The resale must be conducted in a commercially reasonable manner.

6. Suit for Price:

• An unpaid seller can also sue the buyer for the price of the goods if they have not been paid. This legal recourse allows the seller to recover the outstanding amount through a court process.

7. Suit for Damages:

• In addition to suing for the price of the goods, the seller may also claim damages for any losses suffered due to the buyer’s default. This could include compensation for loss of profit or any expenses incurred as a result of the buyer’s breach of contract.

8. Right to Sue for Interest:

• If there is a delay in payment beyond the agreed-upon time, the unpaid seller may also have the right to sue for interest on the outstanding amount. The rate of interest may vary depending on the terms of the contract or statutory provisions.

 The rights of unpaid sellers against goods in India are comprehensive, providing legal avenues for recourse in case of non-payment by buyers. These rights play a crucial role in ensuring fairness and security in commercial transactions, ultimately contributing to the smooth functioning of the business environment. It is essential for both buyers and sellers to be aware of these rights to avoid disputes and uphold contractual obligations effectively.