Rights of an unpaid seller against the goods

Unpaid seller (s. 45). A seller is an unpaid seller when the price has not been paid or tendered in full and he has an immediate right of action for the price (s. 45(1)(a)), or when a bill of exchange or other negotiable instrument received as conditional payment has not been honoured as the condition required, by dishonour or otherwise (s. 45(1)(b)). Seller here has an extended meaning (s. 45(2)): it covers anyone in a seller's position, such as a seller's agent holding a bill of lading endorsed to him, or a consignor or agent who has himself paid the price or is directly responsible for it. Our illustration: a wholesaler who sells rice on thirty days' credit becomes an unpaid seller once the thirty days have run and the price is still outstanding.

Rights against the goods (s. 46), which the unpaid seller has by implication of law, subject to the other provisions of the Act and to any other law in force:

• Where the property has passed to the buyer: (i) lien (s. 47), the right to retain the goods while in possession until the price is paid or tendered (so a valid tender of the price also ends it), available where the goods were sold without any stipulation as to credit, where they were sold on credit and the term of credit has expired, or where the buyer has become insolvent, and even where the seller holds the goods as the buyer's agent or bailee;
  2. stoppage in transit, which arises only after the seller has parted with the possession of the goods: if the buyer becomes insolvent, the seller may stop the goods while they are still in transit and resume possession (s. 46(1)(b)); and (iii) resale (s. 54): the seller may resell goods that are perishable, without notice to the buyer; or after giving the buyer notice of his intention to resell, if the buyer, within a reasonable time of receiving that notice, still does not pay or tender the price; or where the contract expressly reserves a right of resale on the buyer's default. After a resale on notice the seller may recover any shortfall from the original buyer as damages and keep any surplus; after a resale without notice he cannot recover the loss, and any surplus must be returned to the original buyer (s. 54(2)). Where the contract expressly reserves a right of resale on default, no notice of resale is needed, and the seller may still recover damages from the original buyer. A buyer from a seller who has exercised lien or stoppage in transit gets a good title against the original buyer even though no notice of resale was given. Our illustration: a fruit merchant whose buyer fails to collect and pay for ten crates of mangoes may sell them elsewhere without first giving notice.
• Where the property has not passed: the right of withholding delivery, matching the rights of lien and stoppage in transit.

These rights exist, under section 46, even if the property in the goods has passed to the buyer.

Conclusion. An unpaid seller is protected against the goods themselves, by retaining them (lien), recovering them in transit (stoppage) and reselling them, in addition to his personal remedies against the buyer.