Home » Contract Law » UNPAID SELLER.

When the buyer does not pay the price of the goods,the seller is deemed to be unpaid. Civil Code 2074 does not provide definition of unpaid seller. A seller is said to be an unpaid seller if :-

  • Goods are sold on cash not credit.
  • He/She should be unpaid for the sold goods.
  • He/She should not refuse to receive the payment.

Rights of unpaid seller

An unpaid has two types of rights they are as follows:

A) Right against the goods:

The following are the right against the goods:

a) Right to lien : An unpaid seller has the right to retain goods until the price is paid. He/She has right to retain  the goods in the following cases:

  •  if the goods are sold on cash term not on credit term.
  • if sold on credit when the credit period expire.
  • if the buyer become insolvent.
  • if the goods are in the seller possession.

b) Right of stoppage in transit : The seller also has right of stoppage in transit. The seller can keep hold of the goods from the carrier. The right can only be exercised by the seller on the following two condition:

  • if the buyer become insolvent.
  • if the goods are in transit (if not delivered).

c) Right to resale : He/She can resale the goods on the following conditions:

  • If the goods are perishable in nature.
  • If these rights is mentioned in the contract of sale.
  • If the seller gives a notice of resale and the buyer does not pay the price within a reasonable time.

B) Right against the buyer personally: The unpaid seller also has the rights against the buyer personally on the following:

a) Suit for damages: Unpaid seller has a right to sue the buyer for damages if the buyer refuses to accept the goods and pay the price. The seller can receive the following damages from the buyer:

  • Any loss suffered from the non-acceptance of goods.
  • A reasonable charge for care and custody of goods.

b) Suit for price: The unpaid seller has a right to sue for aggreived price. These right applies even when the goods are in the possession of seller.

c) Suit for interest : Unpaid seller also has right to sue for interest. He can sue for interest if there is agreement between the buyer and seller about the interest on price of goods. If there is no specific agreement then the seller can sue for intrest from the date he notifies the buyer.








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