CENTER FOR DISTANCE AND ONLINE EDUCATION

INTEGRAL UNIVERSITY

LUCKNOW

ASSIGNMENT

Name :-
Kyanaat Khan
 SUB. NAME:- MERCANTILE LAW - (BCOM 102)

What is an unlawful agreement?

Answer

An unlawful agreement refers to a contract or agreement that involves actions or terms

that are illegal, prohibited by law, or against public policy. Such agreements are not
enforceable by law, meaning they cannot be upheld in a court of law.

Characteristics of Unlawful Agreements:

1. Illegality: The agreement involves illegal activities, such as the commission of a crime (e.g.,
drug trafficking, bribery).
2. Contrary to Public Policy: Even if the agreement is not criminal, it may still be deemed
unlawful if it goes against public policy, such as agreements that restrict competition (anti-
competitive agreements) or contracts that encourage actions harmful to society.
3. Violation of Legal Provisions: The terms of the agreement violate specific laws or
regulations, such as the sale of prohibited goods or services (e.g., human trafficking, selling
counterfeit goods).

Examples of Unlawful Agreements:

1. Contracts Involving Illegal Activities:

 An agreement to sell illegal drugs or smuggle goods.
 A contract for the commission of a crime, such as hiring someone to commit fraud or theft.
2. Contracts Contrary to Public Policy:
 A contract that restrains trade or creates a monopoly, which is prohibited by antitrust laws.
 An agreement that encourages or rewards illegal conduct, such as an agreement to pay
someone to break the law.
3. Contracts that Involve Fraud or Misrepresentation:
 An agreement where one party lies or misrepresents information, such as selling a
property with a fake title deed.
4. Contracts in Restraint of Marriage or Legal Rights:
 A contract that attempts to prevent someone from marrying or entering into a valid legal
contract.

Consequences of Unlawful Agreements:

 Void and Unenforceable: Unlawful agreements are considered void and have no legal
effect. Neither party can enforce the terms of the agreement in court.
 No Remedies: In most cases, since the agreement itself is illegal, neither party can seek
compensation or damages for non-performance of the contract.
 Criminal Liability: If the unlawful agreement involves criminal activity, the parties may
also face criminal penalties.
 Example:

If two parties enter into a contract for the sale of counterfeit luxury goods, the agreement is
unlawful because it involves the sale of illegal goods. The contract is void, and neither party
can take legal action to enforce it or seek compensation if the agreement is not fulfilled.

In summary, an unlawful agreement is one that violates the law or public policy, and it is
not enforceable in court. The parties involved in such agreements may face legal
consequences depending on the nature of the illegality involved.

Explain the term consumer under Consumer Protection Act, 1986

Answer

Under the Consumer Protection Act, 1986 of India, the term "consumer" is defined to
protect the interests of individuals who purchase goods or services for personal use. The
act ensures that consumers are not exploited by unfair trade practices and that they have
access to a system for redressal of grievances related to goods and services.

Definition of a Consumer (Section 2(d) of the Consumer Protection Act, 1986):

A consumer is defined as:

 Any person who buys any goods or hires any services for a consideration (money or
otherwise), and this consideration is paid or promised, or partly paid and partly promised,
to the seller or service provider.
 The goods or services are purchased for personal, household, or domestic use, not for
resale or commercial use.

Key Points of the Definition:

1. Buyer of Goods:
A consumer is someone who purchases goods for personal use. For example, if an
individual buys a refrigerator for home use, they are considered a consumer.
2. Hirer of Services:
A person who hires or avails services for personal use, including services like medical
treatment, legal services, or educational services, is considered a consumer.
3. Exclusion of Commercial Transactions:
A person who buys goods or hires services for resale or commercial use does not qualify as
a consumer under this act. For example, a retailer purchasing goods from a wholesaler for
resale is not considered a consumer.
4. Implied Contract:
If a person purchases goods or services without paying money upfront (i.e., on credit), they
are still considered a consumer as long as the goods or services are for personal use.

Examples of Consumers:

 Goods: If an individual buys a washing machine for home use, they are a consumer.
 Services: If someone hires a plumber to fix a leak in their house, they are a consumer
under the Act.
 Who is Not a Consumer?

The following are not considered consumers under the Act:

 A person who buys goods or services for commercial purposes (e.g., a business
purchasing materials for manufacturing).
 A person who exchanges goods or services (i.e., the transaction is not a purchase).

Rights of Consumers under the Act:

The Consumer Protection Act, 1986 also provides certain rights to consumers to ensure
they are protected from unfair practices, such as:

 Right to Safety: Protection against goods and services that are hazardous to health and life.
 Right to Information: Consumers have the right to be informed about the quality,
quantity, potency, and price of goods or services.
 Right to Choice: Consumers are entitled to a variety of products and services at
competitive prices.
 Right to Redressal: Consumers can seek redressal for complaints regarding defective
goods or services.

In summary, under the Consumer Protection Act, 1986, a consumer is someone who
buys goods or avails services for personal use, excluding those who do so for commercial
purposes. The Act provides legal protection for consumers to safeguard their rights against
exploitation and unfair trade practices

What are the remedies available to a party in case of breach of contract?

Answer

In the case of a breach of contract, where one party fails to fulfill their obligations as per
the terms of the agreement, the injured party has several remedies available under the
law. These remedies aim to compensate the non-breaching party, uphold the terms of the
contract, or dissolve the agreement. The primary remedies for a breach of contract include:

1. Damages

Damages are the most common remedy for a breach of contract. It refers to the monetary
compensation awarded to the non-breaching party to cover the loss suffered due to the
breach.

 Compensatory Damages: These are awarded to the injured party to compensate for the
actual loss suffered due to the breach. They aim to put the injured party in the same
financial position as if the contract had been performed.
 Consequential Damages (Special Damages): These are awarded for losses that occur as a
direct consequence of the breach, beyond the immediate damage caused by the breach. For
example, if a delayed delivery causes the buyer to miss an important sale, consequential
damages might apply.
 Nominal Damages: Awarded when a breach has occurred, but no actual financial loss has
been suffered. The purpose is to recognize the breach rather than to compensate for loss.
 Punitive Damages: These are rare in contract law and are intended to punish the
breaching party for particularly egregious behavior (e.g., fraud) and deter similar conduct.
 Liquidated Damages: These are pre-determined amounts specified in the contract to be
paid in case of a breach. These are enforceable if they are a reasonable estimate of the
anticipated damages.

2. Specific Performance

Specific performance is an equitable remedy where the court orders the breaching party
to perform their part of the contract rather than paying damages. This remedy is typically
used when the subject matter of the contract is unique, and monetary compensation would
not be adequate (e.g., the sale of a unique piece of artwork or property).

However, specific performance is not available in all cases, especially where damages are
an adequate remedy or the contract is impossible to perform.

3. Injunction

An injunction is a court order that either compels or restrains a party from doing a specific
act that breaches the contract.

 Prohibitory Injunction: Prevents the breaching party from taking certain actions that
would violate the contract.
 Mandatory Injunction: Orders the breaching party to perform a specific action required
by the contract (though this is less common than specific performance).

Injunctions are usually granted in cases where the breach threatens ongoing harm that
cannot be compensated with money.

4. Rescission of Contract

Rescission refers to the cancellation of the contract and the restoration of the parties to
their original positions, as if the contract had never existed. This remedy is available when:

 There is a material breach of the contract.

 There is misrepresentation, fraud, duress, or undue influence.
 The contract is found to be voidable (e.g., due to lack of consent or capacity).

Rescission may also be sought if one party fails to perform a significant obligation.

5. Reformation of Contract

Reformation is the process of altering or correcting the terms of a contract to reflect the
true intentions of the parties. This remedy is used when there is
a mistake, misrepresentation, or ambiguity in the contract that needs correction to
make it fair or enforceable.

For example, if two parties enter into a contract but the terms do not reflect what was
agreed upon due to an error, the court may reform the contract to match the original
agreement.
 6. Quantum Meruit (As Much as Earned)

Quantum meruit is a remedy where a party is entitled to be paid for the work or services
performed under the contract if the contract is either voided, rescinded, or has been
partially performed before the breach.

 This remedy allows the party to recover payment for the value of services or goods
provided, even if the contract is terminated.
 It is commonly applied when a contract is breached or incomplete, and one party has
performed part of their obligations.

7. Retraction of Offer (Revocation of Contract)

If the contract has not been fully executed or completed, the injured party may have the
right to withdraw or retract their offer or performance in response to the breach. This is
applicable when the contract is unilateral or partially executed, and the offeror has not
been notified of the breach.

Conclusion:

The remedies for breach of contract aim to ensure fairness and justice in contractual
relationships by providing ways to either compensate the harmed party or enforce the
contract. The choice of remedy depends on the nature of the breach, the impact on the
parties, and whether the injured party seeks to continue the contract or dissolve it.

A contract is defined as "an agreement enforceable by law". Discuss

Answer

The definition of a contract as an "agreement enforceable by law" is a fundamental

concept in contract law. This definition highlights two essential elements:
the agreement and the enforceability by law. Let's break down and discuss both aspects
to understand the full scope of what a contract entails.

1. Agreement

An agreement is a mutual understanding between two or more parties, where each party
agrees to the terms set out by the other. In a contract, this understanding typically involves
a promise or obligation from one party to another.

An agreement is formed when:

 One party makes an offer.

 The other party accepts the offer.
 There is an intention to create legal relations, meaning both parties recognize that the
agreement can have legal consequences.

The offer and acceptance must meet the conditions of mutual consent, meaning both
parties voluntarily agree to the terms.
 Example:
 Offer: A offers to sell their car to B for ₹1,00,000.
 Acceptance: B agrees to buy the car for ₹1,00,000.
 The mutual agreement between A and B constitutes an agreement, but it is not yet a
contract until other conditions are met.

2. Enforceability by Law

For an agreement to become a contract, it must be enforceable by law. This means that
the agreement must satisfy the legal requirements necessary to be recognized by a court,
so that if a party fails to perform their obligations, the other party can seek legal remedies.

The enforceability of an agreement depends on several key legal principles:

Legal Requirements for Enforceability:

 Offer and Acceptance: As mentioned, there must be a valid offer and acceptance.
 Intention to Create Legal Relations: The parties must intend that their agreement will
have legal consequences. If the agreement is for social or domestic purposes, such as a
promise to meet for dinner, it may not be enforceable.
 Capacity to Contract: The parties involved must have the legal capacity to form a contract.
For instance, minors (under the age of majority) and individuals of unsound mind may not
be able to enter into contracts.
 Consideration: There must be something of value exchanged between the parties. This
could be money, goods, or services. An agreement without consideration is generally not
enforceable (with some exceptions like gifts).
 Free Consent: The agreement must be made without coercion, undue influence, fraud,
or misrepresentation. Consent must be freely given by both parties.
 Legality of Object: The purpose of the agreement must be lawful. Contracts involving
illegal activities (e.g., selling prohibited drugs or committing fraud) are void and
unenforceable.

Example:
 If A promises to sell a car to B, and B agrees to buy it for ₹1,00,000, with both parties
intending to create legal relations and with consideration (money), the agreement is likely
to be enforceable by law if it satisfies the other requirements like capacity and legality.

3. Contract vs. Agreement

 While every contract is an agreement, not every agreement is a contract. The critical
distinction is that an agreement becomes a contract when it is enforceable by law.
 For example, a gentleman's agreement (an informal promise made between friends
without any intention to create legal obligations) is an agreement but not a contract.

4. Exceptions

There are some types of agreements that are not enforceable by law, even though they
might meet the general definition of an agreement. These include:
 Agreements without consideration: Agreements made as gifts or without any exchange
of value.
 Illegal agreements: Contracts that involve illegal activities or violate public policy.
 Agreements made by minors: Generally, contracts made by minors are not enforceable
unless they are for essential items or benefits.

Conclusion:

A contract is a specific type of agreement that is enforceable by law. This means that
the agreement must meet certain legal criteria, including mutual consent, legal capacity, a
lawful object, and consideration. Once these elements are satisfied, the agreement becomes
a legally binding contract, and if a breach occurs, the injured party can seek legal remedies.
The key difference between an agreement and a contract is enforceability—only contracts
can be legally enforced by the courts.

What are the rights and duties of a bailee?

Answer
In the context of bailment, a bailee is a person to whom goods or property are delivered
by another person (the bailor) for a specific purpose, under an agreement, without
transferring ownership of the goods. The Bailment relationship creates
both rights and duties for the bailee.
Rights of a Bailee:
1. Right to Compensation:
 The bailee has the right to be compensated for their services, as per the agreement with
the bailor. If the bailee is not compensated, they have the right to claim compensation.
 For example, if someone deposits a car with a mechanic for repairs, the mechanic (bailee)
has the right to be paid for the service.
2. Right of Lien:
 A bailee has the right to retain possession of the goods until the bailor compensates them
for services provided. This is known as the right of lien.
 The lien can be general (for services rendered to the goods) or particular (for any unpaid
expenses incurred during the bailment).
 For instance, if a person deposits their clothes with a dry cleaner (bailee), the dry cleaner
can retain the clothes until the payment is made.
3. Right to Recover Costs:
 If the bailee has incurred expenses in the course of handling the goods (e.g., transportation,
storage), they have the right to recover these expenses from the bailor.
 This is particularly relevant when the bailment involves transportation or safekeeping
services.
4. Right to Return the Goods:
 A bailee has the right to demand the return of the goods at the end of the bailment, either in
the same condition (except for normal wear and tear) or as agreed upon.
 If the bailor fails to take back the goods, the bailee can seek legal remedy or claim the
goods' return through the courts.
Duties of a Bailee:
1. Duty of Care:
 The bailee has a duty to take reasonable care of the goods entrusted to them. This duty
varies depending on the type of bailment (whether it's for the benefit of the bailor or the
bailee).
 If the bailment is for the benefit of the bailor, the bailee must take reasonable care as
would an ordinary person.
 If the bailment is for the bailee's benefit, the bailee must take a higher degree of care.
 For example, a hotel keeper (bailee) must take reasonable care of the luggage (goods) left
by guests (bailors), and a warehouse keeper must ensure the goods are stored securely.
2. Duty Not to Use the Goods for Unauthorized Purposes:
 The bailee has a duty not to use the goods for any unauthorized purpose. If the bailee
uses the goods in a way that was not agreed upon or for their own benefit (without the
bailor’s consent), they can be held liable for any loss or damage.
 For instance, if someone deposits a car for repair, the mechanic (bailee) should not use the
car for personal purposes.
3. Duty to Return the Goods:
 At the end of the bailment, the bailee has a duty to return the goods to the bailor or
dispose of them according to the bailor’s instructions.
 The goods must be returned in the same condition, except for reasonable wear and tear. If
the goods are damaged or lost, the bailee may be liable for damages.
4. Duty to Inform the Bailor of Any Changes in the Condition of Goods:
 If there is any deterioration or damage to the goods during the period of bailment, the
bailee has a duty to inform the bailor of the condition of the goods.
 For example, if a person entrusts their pet to a pet-sitter (bailee) and the pet gets sick, the
bailee must inform the bailor about the pet’s condition.
5. Duty Not to Mix Goods:
 A bailee should not mix the goods with those of other persons without the consent of the
bailor. If the goods are mixed, the bailee may be liable for the loss or damage to the mixed
goods.
 For example, if a warehouse keeper (bailee) stores goods from different parties, they
should ensure that each party’s goods are clearly identifiable and not mixed with others.
Conclusion:
The rights and duties of a bailee arise from the bailment relationship, where the bailee
temporarily takes possession of goods or property for a specific purpose. The bailee’s
rights include compensation, a lien on the goods, and the right to recover costs. On the
other hand, the bailee’s duties involve taking reasonable care of the goods, returning
them, and using them only for the agreed-upon purpose.
These rights and duties ensure that the bailee handles the goods in good faith and in a
manner that respects the interests of the bailor, while also protecting the bailee’s interests
in certain circumstances (such as seeking payment for services rendered)
Define the term condition. State the conditions in contract for the sale of goods by description.
Answer

Definition of Condition:

In the context of contracts, a condition is a fundamental stipulation or requirement that

forms an essential part of an agreement. It is a term in the contract, the breach of which
may allow the aggrieved party to terminate the contract and seek damages. A condition is
crucial to the performance of the contract, and failure to comply with it typically results in
the loss of benefits or rights under the contract.

In simple terms, a condition is a primary term whose breach can lead to the cancellation of
the contract, as it affects the very essence of the agreement.
 Conditions in a Contract for the Sale of Goods by Description:

In a contract for the sale of goods, when the goods are sold by description, there are certain
conditions under which the sale is considered valid and enforceable. According to the Sale
of Goods Act, 1930 (or similar legislation in many jurisdictions), the following conditions
apply to contracts for the sale of goods by description:

1. Goods Must Conform to the Description:

 When goods are sold by description, they must conform to that description. This means
that the actual goods delivered should match the description provided in the contract.
 Example: If a seller describes the goods as "100 kg of red apples," the apples delivered
must be red and weigh 100 kg.
2. Goods Should Be Fit for the Purpose:
 If the buyer has relied on the description to determine the goods' suitability for a specific
purpose, the goods should fulfill that intended purpose.
 For instance, if a description specifies that the goods are for use in a particular industry or
application, the goods must be suitable for that purpose.
3. Goods Should Be of Merchantable Quality:
 The goods must be of average or acceptable quality when sold by description, meaning they
must meet the standard expected by a reasonable buyer under ordinary circumstances.
 The goods should not be defective or unfit for the usual purpose for which they are sold.
4. Buyer’s Reliance on the Description:
 A key condition is that the buyer has purchased the goods based on the description
provided by the seller, rather than inspecting the goods themselves. This condition
assumes that the buyer has no opportunity to examine the goods and must rely solely on
the description.
 Example: If a buyer purchases a car based on a description, they rely on that description
for the make, model, and condition of the vehicle.
5. Implied Condition of Title:
 The seller must have the right to sell the goods described. This is an implied condition,
meaning that the seller must ensure they hold legal ownership of the goods or have the
right to transfer ownership to the buyer.

Conclusion:

In contracts for the sale of goods by description, the goods must conform to the provided
description, be fit for the intended purpose, be of merchantable quality, and meet the
implied condition of title. These conditions protect the buyer’s interests and ensure that
the sale accurately reflects what was agreed upon between the parties.

Explain different types of negotiable instruments.

Answer

Types of Negotiable Instruments

 Negotiable instruments are documents that allow the transfer of money or goods. They are
transferable from one person to another and can be used as a means of payment. The main
types are:

1. Promissory Note: A written promise by one party to pay a certain amount to another
party either on demand or at a specified time. It involves two parties—the maker and the
payee.
2. Bill of Exchange: A written order from one party (the drawer) to another party (the
drawee) to pay a specific amount to a third party (the payee) either on demand or at a
future date. It involves three parties.
3. Cheque: A written order to a bank by an account holder to pay a specific amount to a
named person or entity. It is payable on demand.
4. Certificate of Deposit (CD): A negotiable instrument issued by a bank acknowledging a
deposit and agreeing to repay the amount with interest at a specific time.
5. Bank Draft: A payment instrument issued by a bank, where the bank guarantees the
payment, making it prepaid and secure.
6. Bill of Lading: A document issued by a carrier acknowledging the receipt of goods for
shipment, which can be transferred to claim goods.

These instruments make transactions easier and more secure, especially in trade and
finance.

Discuss liabilities of partners under Partnership Act

Answer

Liabilities of Partners Under the Partnership Act

Under the Indian Partnership Act, 1932, the liabilities of partners are defined to regulate
the conduct of partners and their obligations in a partnership business. The partnership act
governs the relationships between partners and also outlines their liabilities towards each
other, the firm, and third parties.

1. Liability to Third Parties

Partners are jointly and severally liable for the debts and obligations of the partnership
firm. This means:

 Joint Liability: All partners share the responsibility for the debts of the firm.
 Several Liability: Each partner can be held individually liable for the entire amount of the
firm’s debt. For example, if one partner fails to pay the debt, the other partners can be
called upon to pay it.

Key Points:
 Liability is Unlimited: The partners are personally liable for the debts of the firm, even to
the extent of their personal assets.
 Extent of Liability: The liability of each partner is joint and several for the firm’s debts,
meaning any creditor can approach any partner for the full recovery of debts.

2. Liability for Acts of Partners

 Partners are liable for the actions taken by other partners within the scope of the firm’s
business, even if they do not personally approve of or have knowledge of the action.

Key Points:
 Within the Course of Business: If a partner enters into a contract or acts on behalf of the
firm in the normal course of business, all partners are liable for the act.
 Outside the Course of Business: If a partner acts beyond the firm’s authority or for
personal reasons, the other partners may not be liable, unless they ratify the act later.

3. Liability of Retiring Partners

When a partner retires from a partnership, they are still liable for the debts and obligations
incurred by the firm before their retirement. However, after retirement:

 Liability for Existing Debts: The retiring partner remains liable for the firm’s debts that
were incurred before their retirement.
 New Debts: The retiring partner is not liable for any new debts incurred by the
partnership after their retirement unless agreed otherwise.
 Public Notice: To protect a retiring partner from future liability, they should give a public
notice of their retirement from the firm.

4. Liability of Incoming Partners

When a new partner joins an existing partnership, they are liable for the firm’s existing
debts only if agreed upon by all partners. The incoming partner's liability is limited to the
firm's debts incurred after they joined the partnership.

5. Liability for Acts Committed Before Joining

If a person joins a partnership, they are not liable for any debts or obligations incurred by
the partnership before they joined, unless they explicitly agree to take on that
responsibility.

6. Liability for Profit Sharing

Partners share the profits and losses of the business according to the terms agreed upon in
the partnership deed. If there is no such agreement, the profits and losses are shared
equally among the partners.

What do you mean by performance and discharge of contract?

Answer

Performance of Contract

Performance of a contract refers to the execution or fulfillment of the terms and

conditions as agreed upon by the parties involved in the contract. It is the carrying out of
the promises made in the contract and results in the completion of the obligations.
Performance can take place in several ways:
1. Actual Performance: When both parties fulfill their respective obligations under the
contract, this is known as actual performance. For example, in a sale contract, the seller
delivers the goods, and the buyer makes the payment as agreed.
2. Constructive Performance: If a party has offered to perform their obligations but the
other party refuses or prevents them from doing so, it can be considered constructive
performance. In such cases, the contract may be treated as discharged even though the
performance was not completed.
3. Time and Place of Performance: The contract may specify the time and place for
performance. If no time is stated, performance must occur within a reasonable time, and if
the place is not specified, the performance should happen at the place where the contract
was made.
4. Performance by a Third Party: In some cases, a contract may be performed by a third
party if agreed upon by the parties involved. For example, a seller may authorize a delivery
service to deliver the goods to the buyer.

Discharge of Contract

The discharge of a contract refers to the termination or cancellation of the contract,

where the parties are no longer bound by its terms. Discharge can occur in several ways:

1. By Performance: When both parties fulfill their obligations under the contract, the
contract is discharged, and both are released from further responsibilities.
2. By Agreement: If both parties mutually agree to end the contract before its performance is
completed, the contract is discharged. This can be done through an accord and
satisfaction, where a new agreement replaces the old one.
3. By Breach: If one party fails to perform their obligations or violates the terms of the
contract, the other party may consider the contract discharged. A breach allows the
aggrieved party to terminate the contract and seek damages.
4. By Impossibility of Performance: If the performance of the contract becomes impossible
due to unforeseen circumstances (such as a natural disaster or death of a party), the
contract is discharged. This is known as frustration of contract.
5. By Lapse of Time: If a contract includes a specific time frame for performance and that
time expires without performance, the contract may be discharged.
6. By Novation: When the original contract is replaced by a new contract with the consent of
all parties involved, the old contract is discharged.
7. By Operation of Law: A contract can be discharged by operation of law, such as when a
party is declared bankrupt or when a court order invalidates the contract.

Conclusion

 Performance of a contract involves fulfilling the terms and obligations agreed upon by
the parties.
 Discharge of a contract occurs when the contract is terminated due to performance,
agreement, breach, impossibility, lapse of time, novation, or operation of law.

Both performance and discharge are crucial aspects of contract law that help determine
when a contract is completed or when the parties are released from their duties.

Who is an unpaid seller? What are the rights of an unpaid seller?

Answer
 Who is an Unpaid Seller?

An unpaid seller is a seller who has not received payment for the goods sold, either in full
or in part, under a contract of sale. According to the Sale of Goods Act, 1930, a seller is
considered "unpaid" when:

1. The whole or part of the price has not been paid or tendered.
2. The buyer has refused or neglected to pay for the goods after they were delivered.
3. The buyer’s payment has been dishonored, such as when a cheque is returned unpaid.

Even if the seller retains possession of the goods, they are still regarded as an unpaid seller
if they have not received full payment.

Rights of an Unpaid Seller

The Sale of Goods Act, 1930 provides specific rights to an unpaid seller to protect their
interests. These rights can be exercised when the seller has not received payment for goods
sold. The rights of an unpaid seller include:

1. Right of Lien (Right to Retain Goods)

The unpaid seller has the right to retain possession of the goods until the full payment is
made, provided the goods are in the seller's possession.

 When the Right Applies: This right arises when the buyer becomes insolvent or fails to
pay for the goods.
 Scope: The lien can be exercised until the seller receives the full payment or the contract is
otherwise discharged.

2. Right of Stoppage in Transit

If the buyer becomes insolvent or fails to pay, the unpaid seller has the right to stop the
goods in transit and reclaim possession from the carrier or other third parties.

 Conditions: The seller can exercise this right only if the goods are in transit, and the seller
must inform the carrier or bailee about their decision to stop the goods.
 Purpose: This right ensures the seller can recover their goods before they reach the buyer
if payment is not made.

3. Right of Resale

An unpaid seller has the right to resell the goods if the buyer defaults on payment. This
right can be exercised under certain conditions, including giving reasonable notice to the
buyer.

 Conditions: The seller can resell the goods either in a private or public sale.
 Entitlement to Damages: If the seller resells the goods, they may recover the loss incurred
from the original sale, including any expenses or costs related to the resale.
 4. Right to Sue for Price

If the goods have been delivered and the buyer refuses to pay or is unable to pay, the seller
can sue the buyer for the price of the goods.

 When this Right is Exercised: This can occur when the goods have already been
delivered, and the buyer does not pay for them.
 Amount Recoverable: The seller can claim the price of the goods, as agreed upon in the
contract.

5. Right to Sue for Damages for Non-Acceptance

If the buyer refuses to accept the goods or repudiates the contract, the unpaid seller has the
right to sue the buyer for any damages caused by this refusal.

 Damages: The seller can claim for the loss suffered due to non-acceptance of the goods, as
well as any other financial harm caused by the buyer’s refusal to accept or pay.

Conclusion

An unpaid seller is a seller who has not received payment for goods sold, and they are
entitled to several rights under the Sale of Goods Act, 1930. These include the right to
lien, stoppage in transit, resale, suing for the price, and claiming damages for non-
acceptance. These rights help the unpaid seller protect their interests and recover losses
due to the buyer’s failure to pay.