Special Contracts · Sale of Goods

Rights of an Unpaid Seller and Remedies for Breach

Apply lien, stoppage in transit, resale and withholding delivery, then separate these rights against goods from personal remedies against the buyer.

7 min readReviewed by Advocate Aditya Sharma
Sections 45 to 54Sections 55 to 61

In one line

An unpaid seller may protect the goods through lien, stoppage or resale and may separately pursue statutory remedies against the buyer.

After this note, you should be able to

  • Identify an unpaid seller under Section 45.
  • Distinguish lien, stoppage in transit and resale.
  • Choose the correct personal remedy for breach.

Rights against the goods

First ask where the goods are and whether ownership has passed.

Unpaid seller
The whole price remains unpaid or untendered, or a negotiable instrument taken as conditional payment is dishonoured or otherwise fails.
Lien
A seller retaining possession may hold the goods where there is no credit, credit has expired or the buyer is insolvent.
Stoppage in transit
After parting with possession, an unpaid seller may intercept goods while transit continues, but only if the buyer is insolvent.
Resale
Resale is available within Section 54, especially for perishable goods or after notice where the buyer fails to pay within reasonable time.
Withholding delivery
Where ownership has not passed, the seller has a corresponding right to withhold delivery.

Personal remedies for breach

Rights against goods do not replace claims arising from the contract.

Suit for price
Section 55 applies where ownership has passed and payment is wrongfully withheld, or where price is payable on a day certain regardless of delivery.
Non-acceptance
The seller may claim damages where the buyer wrongfully neglects or refuses to accept and pay.
Non-delivery
The buyer may claim damages where the seller wrongfully neglects or refuses to deliver.
Specific performance
A court may order delivery of specific or ascertained goods where damages are inadequate.
Warranty and anticipatory breach
Section 59 governs breach of warranty, while Section 60 allows an election after repudiation before the due date.

Work through the facts

Illustration

Facts

A sends machinery to B through a carrier on credit. Before B receives it, A learns that B is insolvent and the price is unpaid.

Likely result

A may stop the machinery while it remains in transit. If the carrier has already acknowledged holding it for B, transit may have ended.

What to learn

Stoppage requires unpaid status, buyer insolvency and goods still in transit.

Cases with a purpose

Landmark judgments

Learn the rule and where to use it. A case name without its legal function adds little to an answer.

P.S.N.S. Ambalavana Chettiar & Co. v. Express Newspapers Ltd.

Further reading

AIR 1968 SC 741

Principle: The statutory resale power under Section 54(2) depends on property having passed to the buyer subject to the unpaid seller's lien.

Use in an answer: Use it to separate statutory resale from an ordinary damages claim where unascertained goods never passed.

Read primary judgment

Lickbarrow v. Mason

Further reading

(1787) 2 TR 63

Principle: The doctrine of stoppage in transit protects an unpaid seller when the buyer becomes insolvent before obtaining the goods.

Use in an answer: Use it to explain the commercial foundation of stoppage in transit.

For a 10-mark answer

Answer structure

  1. Establish unpaid-seller status under Section 45.
  2. State whether ownership and possession have passed.
  3. Apply lien, transit, insolvency, notice and resale requirements.
  4. Add the appropriate price or damages remedy separately.

Common mistakes

  • Requiring buyer insolvency for lien in every case.
  • Using stoppage after transit has ended.
  • Treating lien or stoppage as automatic rescission.

Before you close the tab

Quick revision

  • Lien depends on possession.
  • Stoppage requires insolvency and continuing transit.
  • Resale is controlled by Section 54.
  • Withholding applies where property has not passed.
  • Rights against goods and personal remedies are distinct.

Test yourself

  1. When is a seller legally unpaid?
  2. What ends stoppage in transit?
  3. When can the seller sue for price?

Short answers

Frequently asked questions

Can an unpaid seller stop goods if the buyer is solvent?

No. Stoppage in transit under Section 50 requires the buyer to be insolvent, though another contractual remedy may exist.

Does obtaining a decree for price end the seller's lien?

No. Section 49 states that lien is not lost merely because the seller has obtained a decree for the price.

Primary sources

This is an educational study note. Read the bare provision and full judgment before relying on a proposition in research or practice.