Source: 4)a)6m,MTP1,June2019, RTP,June20186 Marks
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Question Scenario

Describe the term “unpaid seller” under the Sale of Goods Act, 1930? When can an unpaid seller exercise the right of stoppage of goods in transit?

Estimated Writing Time: 10 mins Try in Practice Mode

Suggested Answer

Unpaid Seller : According to Section 45 of the Sale of Goods Act, 1930 the seller of goods is deemed to be an 'Unpaid Seller' when-\n(a) the whole of the price has not been paid or tendered. \n(b) a bill of exchange or other negotiable instrument has been received as conditional payment, and it has been dishonoured.\nRight of stoppage of goods in transit\nWhen the unpaid seller has parted with the goods to a carrier and the buyer has become insolvent, he can exercise this right by asking the carrier to return the goods back, or not to deliver the goods to the buyer. \nHowever, the right of stoppage in transit is exercised only when the following conditions are fulfilled: \n(a) The seller must be unpaid. \n(b) The seller must have parted with the possession of goods. \n(c) The goods must be in the course of transit. \n(d) The buyer must have become insolvent. \n(e) The right is subject to provisions of the Act.

Exam Strategy Tip

When answering law questions in the CA Foundation exam, follow the "Provision -> Facts -> Conclusion" structure for maximum marks. Ensure to state the relevant sections where applicable to earn bonus marks from the evaluator.

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