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Class Report 2

The document discusses the rights of an unpaid seller against goods under the Sales of Goods Act of 1930. It outlines that an unpaid seller in possession of goods has the right of lien over the goods in three cases: a) where goods were sold without credit terms; b) where credit terms have expired; or c) where the buyer is insolvent. The seller's lien exists as long as they retain possession of the goods and allows them to withhold delivery until payment. This right of lien only applies to recovering unpaid prices, not other charges like storage fees. It extends to all goods in the seller's possession, even if partial payment was made.

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53 views2 pages

Class Report 2

The document discusses the rights of an unpaid seller against goods under the Sales of Goods Act of 1930. It outlines that an unpaid seller in possession of goods has the right of lien over the goods in three cases: a) where goods were sold without credit terms; b) where credit terms have expired; or c) where the buyer is insolvent. The seller's lien exists as long as they retain possession of the goods and allows them to withhold delivery until payment. This right of lien only applies to recovering unpaid prices, not other charges like storage fees. It extends to all goods in the seller's possession, even if partial payment was made.

Uploaded by

Nitheesh Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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LAW OF CONTRACTS-II

CLASS REPORT – 2

EDGAR K

BA0190020

Module 4 Sales of Goods act, 1930

Rights of unpaid seller against the goods:

1. Right of lien:

An unpaid seller in possession of the goods sold is entitled to exercise has lien on the
goods in the following cases:

a) Where the goods have been sold without any stipulation as to credit;

b) Where the goods have been sold on credit, but the terms of credit has expired and

c) Where the buyer becomes insolvent (Section 2 (8), even though the period of
credit may not have yet expired.

In the case of buyer’s insolvency the lien exists even though goods had been sold on
credit and the period of credit had not yet expired.

The unpaid seller’s lien is a possessory lien i.e., the lien can be exercised as long as the
seller remains in possession of goods.

He may exercise his right of lien notwithstanding that he is in possession of goods as an


agent or bailee for the buyer. Section 47 (2) of SGA, 1930.

Transfer of property in goods or transfer of documents of title to the goods does not affect
the exercise of this right, provided the goods remain in the actual possession of the seller.

In fact when property has passed to the buyer then only retaining of goods is called
technically ‘lien’.

Where the property in the goods has not passed to the buyer and the title is still with the
seller then it is strictly speaking, anomalous to say that the seller has a lien against his
own goods.
The seller’s lien when property has not passed to the buyer is termed as ‘a right of
withholding delivery’.

Accordingly, Section 46 (2) provides:

“Where property in goods has not passed to the buyer , the unpaid seller has, in
addition to other remedies, a right of withholding delivery similar to and co-extensive
with his right of lien and stoppage in transit where the property has passed to the
buyer”.

This right of lien can be exercised only for the non-payment of the price and not for any
other charges e.g., maintenance or custody charges, which the seller may have to incur for
storing the goods in exercise of his lien for the price. Section 46 (1) (a) and 47 (1).

This right of lien extends to whole of the goods in his possession even though part
payment for the goods has already been made. In other words, the buyer is not entitled to
claim delivery of a portion of the goods on payment of a proportion of price.

But where an unpaid seller has made part delivery of the goods, he may exercise his right
of lien on the remainder, unless such part delivery has been made under such
circumstances to show an agreement to waive the lien. Section 48.

The lien can also be exercised even though the seller has obtained a ‘decree’ for the price
of the goods.

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