Business Law: Unpaid Seller

Introduction

• Presenter: Professor Ivneet
• Topic: Unpaid Seller in Business Law
• Previous coverage: Links to earlier videos in the series provided in the description.

Definition of Unpaid Seller

• A seller who has sold goods but hasn't received full or any payment.
• Partial payments still qualify the seller as an "unpaid seller."
• Reference: Section 45 of the Sale of Goods Act.
• Example: A purchased goods worth Rs. 20,000 from B but has only paid Rs. 15,000. B is an unpaid seller for Rs. 5,000.

Rights of an Unpaid Seller

• Two Main Rights: Against the goods and Personally against the Buyer.

Rights Against the Goods

1. Right of Lien (Sections 47-49)

• Lien: Right to retain possession of goods until payment is made.
• **Key Points: **
  • Possession vs. Ownership: Possession means holding the goods, ownership means owning them. They are distinct.
  • Can exercise lien only while having possession.
  • Circumstances for exercising lien:
    • Goods not sold on credit.
    • Unpaid even after agreed credit period.
    • Buyer becomes insolvent.
• Termination of Lien:
  • Loss of possession (goods delivered to carrier or buyer’s agent).
  • Waiving the lien right.

2. Right of Stoppage in Transit (Sections 50-52)

• Condition: Buyer must be unpaid and becomes insolvent.
• Goods in Transit: Goods are being carried to the buyer but are not yet delivered.
  • The seller can stop and reclaim goods if informed of buyer's insolvency during transit.
• Circumstances:
  • Applicable only when goods are in transit.
  • Carriers can hold goods as seller's agent (lien applicable) or buyer's agent (lien inapplicable).
  • **Termination of Transit: **
    • Buyer/agent takes delivery before reaching the destination.
    • Carrier acknowledges holding goods on buyer’s behalf.
    • Carrier wrongfully refuses delivery to buyer/agent.

3. Right of Resale (Section 54)

• Conditions for Resale:
  • Perishable goods.
  • Seller retains possession by lien or stoppage in transit.
  • Seller informs buyer of intent to resell if not paid.
  • Reclaim loss or profit from resale situation.
  • Seller must give buyer one last opportunity before resale.
  • Without notice, seller cannot claim subsequent resale loss.

Rights Against the Buyer Personally

1. Suit for Price (Section 55)

• Ownership transferred but payment refused.
• Buyer fails to pay by due date.

2. Suit for Damages (Section 56)

• Refusal to accept goods or make payment (malified intention).
• Measure of damages:
  • Market price vs. contract price at the breach date.
  • Estimated direct loss.
• Given in Indian Contract Act Sections 73 & 74.

3. Repudiation of Contract (Section 60)

• Buyer cancels contract before due date
• Seller waits until due date and can sue on non-delivery.

4. Suit for Interest (Section 61)

• Seller entitled to interest for delayed payment.
• Interest applicable from the due date or expiry of the credit period.

Conclusion

• Recap of the lecture’s main points.
• Encouraged students to ask questions in the comments.
• Recommended liking, sharing, and subscribing to the channel.