who is an unpaid seller and circumstances under which he can be entitle to lien

Forums Sale of Goods Act, 1930 who is an unpaid seller and circumstances under which he can be entitle to lien

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  • #3738

    The Sale of Goods Act, 1930 (hereinafter referred to as the “Act”) defines an unpaid seller as a seller that has not been paid the full price of the goods that have been sold or that has received a bill of exchange or other negotiable instrument as conditional payment, and the condition on which it was received has not been fulfilled
    The rights provided to an unpaid seller, under the Act, are dependent on whether the property in the goods has passed to the buyer or not. An unpaid seller of the goods, the property in which has passed to the buyer, in entitled to exercise the following rights

    Right of lien on the goods for the price while he is in possession of them;
    Right to stop the goods in transit after he has parted with the possession of the goods (incase the buyer becomes insolvent); and
    Right to re-sell the goods (subject to the goods being of a perishable nature or the unpaid seller exercising its right of lien or stoppage in transit )

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    • #4340

      The seller is regarded an unpaid seller under Section 45(1) of the Sale of Goods Act, 1930, when: 1) the entire price has not been paid and the seller has an immediate right of action for the payment.
      2) When a conditional payment has been received in the form of a Bill of Exchange or other negotiable instrument, and the pre-requisite condition has not been met due to the instrument’s dishonour or otherwise. For example, X received a $50 check after selling some things to Y. The bank refused to honour the check when it was presented. X is a seller who has not been paid.

      Lien Entitlement in Certain Situations:
      When a buyer does not pay the price of goods, the seller of goods has the right to execute a lien. As an agent or bailee for the buyer, the seller can keep possession of the goods under this authority. Section 47 allows the seller to keep his possession if the following conditions are met:
      1- In the event that the buyer is bankrupt.
      2- When the credit term on items sold has run out.
      3- Goods sold with no credit conditions attached.
      When products are sold on credit, the right to lien is suspended for the duration of the credit, and the lien is only for the price of the items, not any other costs. If the seller has delivered a portion of the unpaid goods, he can exercise his right of lien on the remainder under Section 48.
      The sellers in Grice V Richardson had delivered a portion of the three parcels of tea included in the sale, but had not been paid for the portion that remained with them. They were given permission to keep it until the price was paid. However, if a portion of the items given shows an agreement to release the lien, the seller cannot keep the rest.

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