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Rights of Unpaid Seller.
The seller of goods is deemed to be an "unpaid seller". (a) When the whole of the price has not been paid or tendered. (b) When a bill of exchange or other negotiable instrument
has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise. The term "seller" includes any person who is in the position of a seller, e.g., an agent of the seller to whom the bill of lading has been indorsed, or a consignor or agent who has himself paid, or is directly responsible for, the price.
The unpaid seller of goods has certain rights against the goods themselves
(I) Where the property in the goods has passed to the buyer.— Notwithstanding that the property in the goods may have passed to the buyer, he has, by implication of law— (A) A lien on the goods, i.e., a right to retain them for the price while he is in possession.
(B) In case of the insolvency of the buyer, a right of stopping the goods in transitu after he has parted with the possession and the goods are in the hands of a carrier.
(C) A right of re-sale, subject to certain conditions. (II) Where the property in the goods has not passed to the buyer. Where the property in the goods has not passed to the buyer, in addition to his other remedies, a right of withholding delivery, similar to and co-extensive with his rights of lien and stoppage in transitu where the property has passed to the buyer.
I. RIGHTS OF UNPAID SELLER AGAINST THE GOODS WHERE PROPERTY HAS PASSED TO BUYER
(A) Lien of the unpaid seller.-The unpaid seller who is in possession of the goods is entitled to retain possession of them until payment or tender of the price, in the following cases(1) Where the goods have been sold without any stipulation as to credit.
(2) Where the goods have been sold on credit, but the term of credit has expired.
(3) Where the buyer becomes insolvent.
He may exercise his right of lien notwithstanding that he is in possession of the goods as agent or bailee for the buyer. Where the unpaid seller has made part delivery of the goods, he may exercise his right of lien or retention on the remainder, unless
such part delivery has been made under such circumstances as to show an agreement to waive the lien or right of retention.
He loses his lien or right of retention in the following cases-
(b) When the buyer or his agent lawfully obtains possession
(c) By waiver of his rights;
but he does not lose the rights by reason only that he has obtained judgment for the price of the goods.
(B) Stoppage in transitu.-When the buyer becomes insolvent, the unpaid seller has the right of stopping the goods and of resuming possession of them so long as they are on their way or in course of transit to the buyer, and he may retain them until payment or tender of the price, subject to the following rules— (1) Goods are deemed to be in course of transit from the time when they are delivered to a carrier by land or water, or other bailee, for purpose of transmission to the buyer, until the buyer or his agent takes delivery of them from such a carrier or bailee. But, if the buyer or his agent should obtain delivery of the goods before their arrival at the appointed destination, the transit is at an end. It is sometimes difficult to say whether the buyer has obtained delivery, e.g., in the case of Whitehead v. Anderson (1842), the assignee of a bankrupt buyer boarded a vessel carrying a cargo of timber consigned to the buyer. He touched it and told the master of the ship that he was there to take possession of the cargo, but the master did not assent to hold the cargo accordingly. It was held that no constructive possession had arisen in the buyer, and that the right of stoppage in transitu had not ceased.
(2) If, after the arrival of the goods at the appointed destina
tion, the carrier or bailee acknowledges to the buyer or his agent that he holds the goods on his behalf and continues in possession of them as bailee for the buyer or his agent, the transit is at an end; even though a further destination for the goods may have been indicated by the buyer.
Here again it is often difficult to say when the destination. has been reached.
LORD ELLENBOROUGH stated in Dixon v. Baldwen (1804), "The goods had so far gotten to the end of their journey that they waited for new orders from the purchaser to put them again in motion . . . and that without such orders they would continue stationary." For example, in Kendall v. Marshall (1883), goods
were sent by the unpaid seller to a forwarding agent, who was instructed by the buyer as to the ultimate destination. It was decided that the right of stoppage in transitu was lost when the goods reached the agent.
(3) But if the buyer rejects the goods and the carrier or
bailee continues in possession of them, the transit is not at an end, even if the seller has refused to receive them back.
(4) Where the carrier or bailee wrongfully refuses to deliver the goods to the buyer or his agent, the transit is at at end.
(5) When goods are delivered to a ship chartered by the buyer, it depends on the circumstances of the particular case whether they are in the possession of the master as a carrier or as agent for the buyer.
(6) Where part delivery of the goods has been made to the buyer or his agent, the remainder of the goods may be stopped in transitu, unless such part delivery has been made under such circumstances as to show an agreement to give up possession of the whole of the goods. (7) The right of stoppage in transitu is exercised either by the seller taking actual possession of the goods or by giving notice to the carrier or bailee in whose possession the goods are. Such notice may be given to the person actually in possession or to his principal; but, if to the principal, to be effectual the notice must be given at such time and under such circumstances that he may, by the exercise of reasonable diligence, communicate it to his servant or agent in time to prevent a delivery to the buyer. When such notice is given to the carrier or bailee he must re-deliver the goods to, or according to the directions of, the seller, who must pay the expenses of such re-delivery.
See also next paragraph as to how the right of stoppage in transitu may be defeated.
(C) Re-Sale. The unpaid seller's right of lien, or retention, or stoppage in transitu is not affected by any sale or other disposition of the goods which the buyer may have made, unless the seller has assented thereto, provided that where a document of title to goods has been lawfully transferred to any person as buyer or owner of the goods, and that person transfers the document to a person who takes it in good faith and for valuable consideration, then if the last-mentioned transfer was by way of sale the seller's right is defeated; and, if it was by way of pledge or other disposition for value, the seller's right can only be exercised subject to the rights of the transferee.
A contract of sale is not rescinded by the mere exercise by an unpaid seller of the above-mentioned rights; but
(1) Where the unpaid seller who has exercised his rights re-sells the goods, the buyer acquires a good title thereto as against the original buyer.
(2) Where the goods are of a perishable nature, or where the seller gives notice to the buyer of his intention to re-sell, and the buyer does not within a reasonable time pay or tender the price, the seller may re-sell the goods and recover from the original buyer damages for any loss occasioned by his breach of contract.
(3) Where the seller expressly reserves a right of re-sale in case the buyer should make default and, on the buyer making default, re-sells the goods, the original contract of sale is thereby rescinded, but without prejudice to any claim the seller may have for damages.
II. RIGHTS OF UNPAID SELLER AGAINST THE GOODS WHERE PROPERTY HAS NOT PASSED TO BUYER
In the cases where the property in the goods has not actually passed, the seller may, in the circumstances above referred to, withhold delivery of the goods. Where some goods under the contract have been delivered or the property in them has passed, but the property in the remainder has not yet passed, the seller may, similarly, withhold delivery of such remainder.
Remedies of the Seller.
The seller of goods may maintain an action for the price(a) If the property in the goods has passed to the buyer, who wrongfully neglects or refuses to pay according to the terms agreed.
(b) If, under the contract, the price is payable on a day certain, irrespective of delivery, and the buyer wrongfully neglects or refuses to pay such price, although the property in the goods has not passed and the goods have not been appropriated to the contract.
The seller may maintain an action for damages where the buyer wrongfully neglects or refuses to accept and pay for the goods, and the measure of the damages is the estimated loss. directly and naturally resulting in the ordinary course of events from the buyer's breach of contract. Where there is an available market for the goods in question the measure of damages is, prima facie, to be ascertained by the difference between the contract price and the market or current price at the time when the goods ought to have been accepted or, if no time was fixed,
then at the time of the refusal to accept. In other circumstances, damages will be assessed in accordance with the general rules considered in Chapter 1. (k)
Remedies of the Buyer.
Action for Damages. The buyer may maintain an action against the seller for damages where the seller wrongfully neglects or refuses to deliver the goods to the buyer. The measure of damages is on the same basis as that referred to above in relation to an action brought by the seller.
Specific Performance.-In an action for breach of contract to deliver specific or ascertained goods, the Court may, if it thinks fit, direct that the contract shall be performed specifically, without giving the defendant the option of retaining the goods and paying damages. Such judgments or decrees are as a rule made only where the goods are of some peculiar value or unique property as, for example, an objet de vertu (i.e., an article of particular artistic merit).
A very usual method of acquiring goods, particularly furniture, motor lorries, railway wagons, etc., is by what is known as the hire-purchase system. A person or firm agrees to buy certain goods and to pay so much a month or a quarter for a stated period, and when the agreed number of instalments which make up the full price has been paid, the property is to vest in the purchaser.
This sounds very simple, but a great deal depends upon the way in which hire-purchase agreements are drawn up. The contract may be such that the hirer of the goods is bound to carry out the transaction, or it may contain a clause that he may at any time return the goods or be asked to return them, or the hiring may be determined on the happening of certain events. If the agreement is worded in the former way, it is, in effect, simply a purchase by deferred payments, and the hirer could make a sale, pledge or other disposition of the goods, to a person taking in good faith and without notice, which would be valid and effectual; in the latter cases, however, the sale being subject to a condition precedent, the hirer cannot give a title. Great care should, therefore, be exercised in drawing up such agreements. It should be noticed that a Hire-purchase Agreement if under hand only requires a 6d. stamp, but if it is under seal it requires a 10s. stamp.
(k) See ante, p. 67.