Rights of an Unpaid Seller

As per the Section 46 of the Sales of Goods Act, an unpaid seller has been given the following rights both against the goods and the buyer:

1. Seller’s Lien: As per Section 47 of the Sales of Goods Act 1930, the seller has the right to retain possession of the goods until payment if he is in possession of the goods. This is possible when:

• The seller sells the goods without any condition of credit.
• The seller sold the goods on credit, but the agreed credit period has expired.
• The buyer of the mentioned goods has been declared insolvent.

The section further explains that the seller may exercise his right of lien even when he holds possession of goods as an agent or as a bailee.

2. Part-delivery: Section 48 of the Sales of Goods Act 1930 states that in a case where the unpaid seller makes part-delivery of the goods, the act gives the seller the right to lien on the remaining goods. The provision shall be valid unless there is an agreement between the buyer and the seller for waiving the lien under part delivery.

3. Right of Stoppage in Transit: Right of stoppage can be called as an extension to the right of lien. The right of stoppage in transit is given to an unpaid seller to stop the goods while they are in transit; in such a case, the seller regains possession and retains them till the buyer pays him the full price. Furthermore, the act has also established that in the event that an unpaid seller loses possession of the goods and the buyer becomes insolvent, the seller can get the goods back.

4. Right of Re-sale: A seller who has not been paid by the buyer has the right to resell the sold items. Section 54 has defined the general criteria for the resale of goods by an unpaid seller:

• If the goods are perishable in nature, the unpaid seller may choose to resell them.
• When the unpaid seller has gained possession of the goods by using the right of lien or stoppage in transit and has given a notice to the buyer expressing his intention to re-sell the goods,.

5. Suit for Price: Where, under a sales contract, the property in the goods has been passed to the buyer by the seller and the buyer has wrongfully refused to pay for the goods received, the seller has the right to sue him for the price of the goods. Furthermore, when the price is payable on any specific day, regardless of the delivery, and the buyer has wrongfully refused or ignored to pay such a price due to the seller, as per the act, the seller has the right to sue him for the price even though the property in the goods has not passed. 

6. Suit for Damages for Non-Acceptance: In a case when the buyer has wrongfully neglected or refused to accept the goods and has refused and neglected to pay for the goods, the seller has the right to sue him for the damages for non-acceptance by the buyer.

7. Repudiation of Contract before Due Date: In a case where the buyer repudiates the contract before the agreed date of delivery, the seller has been vested with the right to treat the contract as rescinded and sue the buyer for damages for the breach of the sale contract. This case is also referred to as the ‘rule of anticipatory breach of contract’.

8. Suit for Interest: In a case when there exists a specific agreement between the buyer and the seller regarding the interest on the price of the goods from the date on which payment becomes due, the seller has the right to recover interest from the buyer. Also, if there exists no specific agreement to cover this clause, the seller may charge interest on the price when it becomes due from such day as he may notify the buyer.