Unpaid Seller

The Sale of goods Act, 1930 (hereinafter mentioned because the “Act”) defines an unpaid seller as a seller that has not been paid the total price of the products that are sold or that has received a bill of exchange or other instrument as conditional payment, and therefore the condition on which it had been received has not been fulfilled.

1. Right of possession/ lien

If the client fails to pay the worth within the decided time, then unpaid seller has the right to keep the products in his possession and he can refuse to deliver the products until the due payment is paid. 

When right of possession is exercised:- 

– When goods are sold on method of accounting, but payment is unpaid.

– When goods are sold on credit basis and also the term of credit has expired.

– When the client becomes insolvent even within the decided period for payment.

– So, far because the goods are within the possession of unpaid seller, he can exercise this right. If goods are lost/ given up then right of possession/ lien is additionally lost/ given up.

Termination of Right of Possession

–  By delivery of products to the buyer/ his agent.

–  By delivery of products to the carrier/ courier company.

–  By waiver, This means that it’s specifically mentioned within the contract that seller can’t   retain the possession of the products whether or not the value has not been paid

–  When buyer has obtained the possession of products lawfully. 

2. Right of stoppage of products in transit

If a buyer fails to pay the worth within the decided time, then unpaid seller has the proper to stop the products in transit.

Conditions for stoppage of goods:-

– When the customer becomes insolvent à Goods must be within the course of transit- This suggests that goods must not be within the possession of the vendor and haven’t reached the buyer’s possession likewise

Termination of Transit. 

– By delivery to the buyer/ his agent.

–  Interception by the customer (Interception means the act of catching/ receiving)

–  When buyer or his agent obtains the delivery of the products before their arrival at the appointed destination hence, the transit involves an end.

– Acknowledgement to the customer by the carrier/ courier company that they’re holding the goods on buyer’s behalf, then also transit involves an end.

– Part delivery of goods

If a part of the products are delivered to the customer then the transit involves an end for the remainder of the products further 

3.Right of resale

The unpaid seller has the right to resale of the products.

Conditions for resale: Without the notice to the client. But just in case of non-perishable items unpaid seller must send notice to the customer for reselling them .

– Where unpaid seller gives the notice to buyer and buyer still don’t pay money for it .

– Where the correct of resale is reserved/ mentioned within the contract or If contract clearly specifies that reselling can’t be done or the other way around.

– Buyer becomes insolvent

– Buyer fails to pay the value of the products

B. Rights of unpaid seller against buyer 

1.Suit for price

2.Suit for interest and special damages-  Here, suit will be filed for interest and special damages. Where, interest are paid on the quantity of the deal between seller and buyer on the choice/ discretion of the court. 

3.Suit for damages for non-acceptance- Suit are often filed against the client if the customer wrongfully refuses to just accept the products.


The seller becomes an unpaid seller when either he had not been paid fully or the customer has did not meet the maturity of bills of exchange or the other instrument accepted by seller as a condition precedent. Under this case, the vendor can resell the products if he had exercised the correct of lien or stoppage in transit, after giving notice to the client and also the new buyer will have good title over the products. during this case, the vendor has the proper to sue the client for failure to pay the desired amount similarly as a lien. On the contrary, if the vendor fails to deliver goods to the customer, he may sue the vendor for non-performance and may claim damages or carrying into action.

Aditya Mehrotra
Hello Everyone, this is Aditya. I am a First year B.A.LL.B. student from Symbiosis Law School, Pune. Being a firm believer of the Pt. Nehru's quote, "Facts are Facts and will not disappear on account of your likes", My aptitude for Law and Journalism is witness to the basic fact that you will find me in the library reading my favorite Legal Books, my favorite being 'The Courtroom Genius' by Nani Palkhivala. I chose Law as my career because I was inspired by the likes of Lawyers like Nani Palkhivala and Ram Jethmalani. I always wanted to contribute to the field of Social Work through Legal means and Emancipation of the Poor. My oratory skills won various accolades both at regional and global level. In my opinion dream does not become reality through magic; it takes sweat, determination, and hard work.