Unpaid seller which defined as any person who is in the position of a seller, the one to whom the bill of lading has been indorsed, or the one who is directly responsible for the price but has yet been paid or tendered according to Section 45 of the Sale of Goods Act 1957. This unpaid seller has certain right over the goods that is being transacted until the other party fully pay him/her. And the right of the unpaid seller is clearly defined within Section 46(1) of the Sale of Goods Act 1957 which states that “Subject to this Act of any law for the time being in force, notwithstanding that the property in the goods may have passed to the buyer, the unpaid seller of goods, as such, has by implication of law – a. A lien on the goods for the price while he is in possession of them; b. In case of an insolvency of the buyer a right of stopping the goods in transit after he has parted with the possession of them; c. A right of resale as limited by this act. “
Distinction of Lien and Stoppage at Transit
Some people might confuse on the difference between lien and stoppage at transit, thus we have to create a clear distinction as to avoid any confusion. The main points of distinction between these two rights of an unpaid seller are basically: a. The seller’s lien attaches when the buyer is in default, whether he be solventor insolvent. The right of stoppage in transit arises only when the buyer is insolvent. b. Lien is available only when the goods are in actual possession of the seller while right of stoppage is available when the seller has parted with possession and the goods are in the custody of an independent carrier. c. The right of lien comes to an end once the seller hands over the possession of the goods to the carrier for the purpose of transmission to the buyer. On the other hand, the right of stoppage in transit commences after the seller has delivered the goods to a carrier for the purposes of transmission to the buyer and continues until the buyer has acquired their possession. d. The right of lien consist in retaining the possession of the goods while the right of stoppage consists in regaining possession of the goods. In general basically we can conclude that the main distinction of those 2 rights is time of the claim of the right, where lien can only be done when the goods are still in the possession of the seller, while stoppage can be done during the sending of the goods to the buyer. And also that the basically lien is retaining the goods in the seller’s possession while stoppage is regaining the possession of the goods to the seller. Right to Stoppage at Transit
Now we are focusing more on the right of stopping the goods in transit which elaborated more on Section 50 of the Sale of Goods Act which stated that “Subject to this Act when the buyer of goods becomes insolvent the unpaid seller who has parted with the possession of the goods has the right stopping them in transit, that is to say, he may resume possession of the goods as long as they are in the course of transit, and may retain them until payment or tender of the price.” Basically it is saying that subject to the Sale of Goods Act, the unpaid seller whose already parted with the possession of the goods(already send the goods of to the buyer) have the right to stop the goods in transit until they get fully paid, as long as the goods are still in the course of transit and have yet reach the buyer. The right can only be exercised if the following conditions are met: a. The buyer has become insolvent
The buyer is said to be 'insolvent' when he has ceased to pay his debts in the ordinary course of business, or cannot pay his debts as they becomes due whether he has committed an act of insolvency or not.; b. The goods are in the course of transit (the goods have gone out of the actual possession of the seller. But they have not reached in the possession of the buyer); c. The seller must be unpaid wholly or...