Source: 6)c)7m,MTP2,May2025, 4)a)6m,MTP1,Dec2023, 4)a)6m,Dec20227 Marks
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Question Scenario

What are the rights of unpaid seller in context to re-sale the goods under Sale of Goods Act, 1930?

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Suggested Answer

Right of re-sale [Section 54 of the Sale of Goods Act, 1930]: The unpaid seller can exercise the right to re-sell the goods under the following conditions: \n(i) Where the goods are of a perishable nature: In such a case, the buyer need not be informed of the intention of resale.\n(ii) Where he gives notice to the buyer of his intention to re-sell the goods: If after the receipt of such notice the buyer fails within a reasonable time to pay or tender the price, the seller may resell the goods. \nIt may be noted that in such cases, on the resale of the goods, the seller is also entitled to: \n(a) Recover the difference between the contract price and resale price, from the original buyer, as damages. \n(b) Retain the profit if the resale price is higher than the contract price.\nIt may also be noted that the seller can recover damages and retain the profits only when the goods are resold after giving the notice of resale to the buyer. Thus, if the goods are resold by the seller without giving any notice to the buyer, the seller cannot recover the loss suffered on resale. Moreover, if there is any profit on resale, he must return it to the original buyer, i.e. he cannot keep such surplus with him [Section 54(2)].\n(iii) Where an unpaid seller who has exercised his right of lien or stoppage in transit resells the goods: The subsequent buyer acquires the good title thereof as against the original buyer, despite the fact that the notice of re-sale has not been given by the seller to the original buyer. \n(iv) A re-sale by the seller where a right of re-sale is expressly reserved in a contract of sale: Sometimes, it is expressly agreed between the seller and the buyer that in case the buyer makes default in payment of the price, the seller will resell the goods to some other person. In such cases, the seller is said to have reserved his right of resale, and he may resell the goods on buyer’s default. \nIt may be noted that in such cases, the seller is not required to give notice of resale. He is entitled to recover damages from the original buyer even if no notice of resale is given. \n(v) Where the property in goods has not passed to the buyer: The unpaid seller has in addition to his remedies a right of withholding delivery of the goods. This right is similar to lien and is called “quasi-lien”.

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