Unpaid Seller
Introduction
Unpaid seller means a person who sells the goods for a price but price has not been paid to him. Unpaid seller has rights against the goods and buyer. Because payment is consideration and reason of the contract so that payment should be paid timely even partly or wholly. The seller is not an unpaid seller if the buyer has offered to pay the price and if the seller refuses to accept it. In such case, the seller loses all the rights against goods and buyer
Definition of unpaid seller
When whole or part of the price of goods has not been paid in such case seller to be called unpaid seller Or when price of goods remain unpaid even after the expiry of the decided period in this case seller is to be called unpaid seller
Features of unpaid seller
Following are the features of unpaid seller
- Seller must sell the goods on cash basis and must be unpaid
- Must be unpaid either wholly or partly
- The decided period has expired and the price has not been paid to him.
- If the price is paid through a bill of exchange
- He must not refuse to accept the payment when he offered
Rights of unpaid seller
Following are the two types of rights of a seller
- Rights of unpaid seller against goods
- Rights of unpaid seller against buyer
Rights of unpaid seller against goods
Unpaid seller has the following rights against the goods. Details are as under.
Right of possession
If a buyer fails to pay the price within the decided time, unpaid seller has right to keep the goods in his possession and he can refuse to deliver the goods to the buyer until due payment is paid
When right of possession can be exercised
Following are the conditions when right of possession can be exercised
- When the goods have been sold without legal agreement
- When the goods have been sold on cash basis, but payment is unpaid
- When the goods have been sold on credit basis, the term of credit has expired
- When the buyer become bankrupt even within the decided period
Termination of right of possession
Following are the conditions when right of possession is terminated
- When seller delivers the goods to buyer without having the legal right on goods
- When buyer has obtained possession lawfully
- When buyer further sales the goods
- When seller loses his possession on goods
Right of stoppage of goods in transit
If a buyer fails to pay the price within the decided time, unpaid Seller has right to stop the goods in transit
Conditions for stoppage of goods
Following are the condition of stoppage of goods and seller can stop the goods to deliver to the buyer
- When the seller must be unpaid
- When buyer become bankrupt
- When the goods are not in possession of seller, but have not reached buyer’s possession such as goods are in transit with career
Methods of stoppage
Following are the methods for stoppage of goods by the seller. Details are as
under
- By taking possession of the goods
- By giving legal notice to the carriers under whose possession the goods are
Right of resale
If a buyer fails to pay the price within a decided time, the unpaid seller has the right to resell the goods
Conditions
Following are the conditions in which sellers can resell the goods. Details are as
under
- When buyer fails to pay the price of the goods
- When buyer become bankrupt
- When the goods are fresh in their nature
- When unpaid seller has expressly reserved his right of resale
- After receiving the notice from seller ,buyer does not pay the price , seller can resale the goods
Rights of unpaid seller against buyer
If a buyer fails to pay the price of the goods and unpaid seller has rights against the buyer
Suit for price
When the ownership of the goods have been transferred to buyer and buyer refuses to pay the price of the goods according to the terms and condition of the contract ,the seller has right to take legal action against buyer for the price of the goods
Suit for breach of contract
When the buyer cancels the contract before the date of the delivery. The unpaid seller can take legal action against the buyer in order to recover the damages in the contract
Suit for damages for non-acceptance
When the buyer refuses to accept and pay for the goods, the seller can take legal action against him for damages for non-acceptance. The seller can recover damages only and not the full price
Suit for special damages and interest
The seller can take legal action against the buyer for special damages where the parties are aware of such damages at the time of contract. The unpaid seller can recover interest at a reasonable rate on the total unpaid price of goods, from the time it was due until it is paid
Conclusion
Unpaid seller under sales of goods act 1872, is a person who has not been paid. He has rights to resale the goods, stoppage of goods or keep them in his possession as well as he also can take legal action against buyer because he has been awarded with these rights by the law