Unpaid Seller & Caveat Emptor in Sales of Goods Act, 1930

Unpaid Seller & Caveat Emptor In Sales Of goods Act, 1930
Before knowing about the unpaid seller we have to know about some important terms which
are used in the definition of unpaid seller:
According to Sales of Goods Act 1930 defines the following terms:
 “Buyer”: means a person who buys or agrees to buy goods;

 “Goods” means every kind of moveable property other than actionable claims and
money; and includes stock and shares, growing crops, grass, and things attached to or
forming parts of the land which are agreed to be severed before sales or under the
contract of sale;
Or in simple words we can say that:
Goods are something which can be moves from one place to another or which can be have
any monetary value or any value in money.
 “Seller” In the situation of the unpaid seller the meaning of seller were changed here
the meaning of seller is that “seller” includes any person who is in the position of a
seller, as, for instance, an agent of the seller to whom the bill of lading has been
endorsed, or consignor or agent who has himself paid, or is directly responsiable for
the price.
 “Specific goods” means goods identified and agreed upon at the time a contract of
sale made;
According to The sales of goods Act, 1930 the unpaid seller is defined as:
The seller of goods is deemed to be an “unpaid seller” within the meaning of this Act-
(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:
Example: A purchases some goods in his personal name on behalf of his principle B. B
refuses to pay the price of the goods. Since A has incurred personal liability, the relationship
between him and his principle will be taken as that of a seller and a buyer. A will be taken as
unpaid seller under the provision of sec, 45.
The unpaid seller has two types of right under the sales of goods act. This includes the:
1. Seller’s right against the goods

2. Seller’s rights against the buyers personally.
Rights against the goods:
1. When the property in goods has passed: Lien Stoppage in Transit and Re-sale.
2. When the property in goods has not passed: withholding delivery and stoppage in
Transit
Rights against the buyer personally:
1. Suit for the price

2. suit for damage
3. repudiation of the contract
4. suit for interest
Rights of Lien:
 A lien is a right to retain the possession of the goods until the price is paid. The right
is immediate in case of cash sale. In case of credit sale it is expiry of the credit
period. The right is also available when the buyer becomes insolvent at any time.
 Lien depends on actual possession and not on title whether as seller or as his agent or
as bailee for the buyer.
 Possession of the goods by the seller must not expressly exclude the right of lien.
 Seller having made part delivery of the goods may exercise lien or the remainder.
Right of stoppage in transit:
The right is available:
1) When the buyer becomes insolvent

2) When the goods are in transit
 Insolvency means failure to pay them on the due whether he has committed an act of
insolvency or not
 This right is an extension of the right of lien
 The carrier may hold goods as an agent of the seller
 If the carrier is holding goods as an agent of the buyers, sellers cannot exercise the
right of stoppage
 Stoppage can be affected by taking possession or by giving notice of stopping.
 Rights of lien or stoppage is transit is not affected by any sale or pledge which the
buyers would have made unless the seller has assented to the same.
Rights of resale:
 When the goods are perishable

 When the notice of resale is given to the buyers but buyers does not respond by
payment/tender of price within a reasonable time.
 In case of loss in a resale seller can claim it from the buyers as damage for breach of
contract.
Rights of withholding delivery:
 Where the property in goods has not passed to the buyers, the unpaid sellers has a
right of withholding delivery.
 This right is co-existent with the right of lien and stoppage in transit.
Caveat Emptor
Caveat emptor is a latin word which means “lets the buyers beware. It is the basic premise
that the buyer buy at his/her own risk and therefore should examine and test a product
himself/herself for obvious defects and imperfection. Caveat emptor still applies even if the
purchase is “as is’or where a defect is obvious reasonable inspection before purchase.
Recently consumer protection laws have started that the seller is to held a higher standard of
disclosure when the defects of a product cannot be identified through casual inspection.
Exception:
Purchase by description: The rules of caveat emptor does not apply in a case where
goods are bought by description from a seller.
Purchase by samples and description: where the goods are bought by samples as
well as by description and the bulk of goods do not correspond with the description
the buyers is entitled to reject the goods.
Fitness for purpose: where the buyers informs the seller the particular purpose for
which the goods are required and rules upon seller’s skill or judgement.
Trade Name: in case of a contract for a specified article under its patents or other
trade name, there is no implied condition as to its fitness for any particular purpose.
Usage of trade: where the usage of trade annexes an implied condition or warranty as
to its quality or fitness for particular purpose and sellers deviates from that, then this
rule of caveat emptor does not apply.
Sale by sample: in the sale of goods by sample the rule of caveat emptor does not
apply if the bulk does not correspond with the sample, or if the buyers is not given as
opportunity to compare bulk with the sample.
Case: In 1980, a doctor killed a 13 years old girl and buried her in garden at the
backyard of the house. But latter the dismembered the body and hid the small pieces
in different parts of the house.
The house was then sold to a couple, who only found the body parts after 10 years in
1990. They were completely unaware of it until them.
The initial reaction was to sell the house and they didn’t tell it to the purchaser. All
would have gone well if it wasn’t for a documentary on the television based on the
murder.
The purchaser demanded their money back, and appealed in the court for money.
But a caveat emptor took a role as a villain, the purchaser never got their money
back. They have to leave the house.

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Unpaid Seller & Caveat Emptor In Sales Of goods Act, 1930

According to Sales of Goods Act 1930 defines the following terms:

 “Buyer”: means a person who buys or agrees to buy goods;

Or in simple words we can say that:

1. Seller’s right against the goods

Rights against the buyer personally:

1. Suit for the price

Right of stoppage in transit:

The right is available:

1) When the buyer becomes insolvent

 When the goods are perishable

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