The Sale of Goods Act provides strong statutory protections to sellers who have not received payment for their goods.
1. Definition: Section 45
A seller is deemed an "Unpaid Seller" when the whole of the price has not been paid or tendered, or where a negotiable instrument received as conditional payment has been dishonored.
2. Rights against the Goods
The unpaid seller has three primary rights against the goods:
- Right of Lien (Sections 47-49): The right to retain possession of the goods until payment. Exercisable only when the seller is in possession of the goods, and:
- Goods are sold without credit terms.
- Goods are sold on credit, and the credit term has expired.
- The buyer has become insolvent.
- Right of Stoppage in Transit (Sections 50-52): When the buyer becomes insolvent and the seller has parted with possession, the seller can stop the goods while they are in transit (in the hands of a carrier) and resume possession.
- Right of Resale (Section 54): The right to resell the goods if they are perishable, or after giving notice to the buyer of intention to resell and the buyer fails to pay within a reasonable time.