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RIGHTS AND DUTIES OF THE BUYER AND SELLER.

Table of Contents

QUESTION BANK.

Q.1. Explain the nature of the right of lien and the right of stoppage in transit of an unpaid seller. How are these rights affected by a sub-sale or pledge by the buyer? Nov. 04.

2. Describe the right of buyer against seller for;
Non-delivery of goods.
Specific performance of contract.

iii. Breach of warranty.

3. Explain various rights and duties of a seller and buyer. Oct. 01.

Q.4. Distinguish between an unpaid seller’s right of lien and right of stoppage in transit. When can he re-sell the goods?. Apr. 04,

Q.5. When is a seller of goods is deemed to be an unpaid seller? What are the rights of an unpaid seller against- (i) the goods, (ii) the buyer Nov. 07, 10.

SHORT NOTES.

Unpaid sellers lien. Apr. 2002
Auction sale.

SYNOPSIS

RIGHTS OF BUYER OR (DUTIES OF SELLER): –
Right to have delivery as per contract (S. 31): –
Right to reject goods (S. 37): –
Right not to accept delivery by installment. (S. 38(1))
Right to repudiate the contract (S. 38(2)): –
Right to examine goods (S. 41): –
Right not to return rejected goods (S. 43): –
Right to sue or Remedies of ‘Buyer’
Sue for damages: –
For the breach of warranty (S. 59):-
For non-delivery (S. 57): –
For anticipatory breach (S. 60): –

B. Sue for specific performance of contract (S. 58): –

DUTIES OF BUYER OR RIGHTS OF SELLER: –
Duty to accept delivery and pay for them (S. 31): –
Duty to apply for delivery (S. 35): –
Duty to pay for, goods accepted under wrongful delivery (S. 37):-
Duty to accept installment delivery (S. 38): –
Duty to take risk of deterioration (S. 40): –
Duty to give notice of rejection (S. 43): –
Duty on refusal of proper delivery (S. 44): –
Duty to pay price (S. 55): –
Duty to pay damages for non-acceptance(S. 56):

UNPAID SELLER: –

UNPAID SELLER ‘DEFINED’ (S. 45): –
RIGHTS OF UNPAID SELLER: –
Right to lien (S. 47): –
Right to stoppage in transit (S. 50): –

AUCTION SALE (S. 64)

Concept of auction sale: –
When auction sale completes?

III. Seller not to bid: –

Sale may be subject to reserved or upset price: –
Auctioneers right not to accept any bid: –

The rights and duties of the buyer and seller are reciprocal. The buyer’s rights are the duties of the seller, and the buyer’s duties are the seller’s rights.

Herein, the rights and duties of the buyer are considered, respectively, the duties and rights of the seller.

I) RIGHTS OF BUYER OR (DUTIES OF THE SELLER): –

The rights of the buyer are against the seller; therefore, they are duties of a seller as follows: –

1) Right to have delivery as per contract (S. 31): –

It is the right of the buyer to get delivery of the goods as per the contract.

2) Right to reject goods (S. 37): –

If the seller sends short or excess delivery or delivery with mixed goods, the buyer has a right to reject them as a whole.

3) Right not to accept delivery by instalment (S. 38(1)):-

Unless otherwise agreed, the buyer is not duty-bound to accept the delivery in instalments.

4) Right to repudiate the contract (S. 38(2)): –

In case of any defect in supplied goods or default in delivery of the goods, the buyer may repudiate the contract, or if he accepts such goods, he can claim damages.

5) Right to examine goods (S. 41): –

Buyer has the right to examine goods before delivery.

In Re-Andrew & co

Held- Ordinarily, the inspection will have to be done at the place and time of delivery.

6) Right not to return rejected goods (S. 43): –

If the buyer (having the right to reject goods) rejects the goods, He is not bound to return such rejected goods; it is the seller’s duty to bring them back at his own expense.

7) Right to sue or Remedies of the ‘Buyer’-

Under the following circumstances, the buyer can sue the seller. These are the buyer’s remedies against the seller.

A) Sue for damages: –

a) For the breach of warranty (S. 59)

Buyer can sue for damages against the seller for breach of warranty.

b) For non-delivery (S. 57): –

Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may sue the seller for damages for non-delivery.

c) For anticipatory breach[1] (S. 60): –

Where either party to the contract of sale repudiates the contract before the date of delivery, the other party may sue for the damages for the anticipatory breach.

d) For interest (S. 61): –

The buyer is entitled (in the absence of the contract to the contrary) to claim interest on the price he has paid if the buyer makes a breach of contract. He is entitled to such interest on price from the date on which the payment was made. The Court may award interest at a rate that it thinks fits.

B) Sue for specific performance of a contract[2] (S. 58): –

One of the important remedies available to the buyer is the suit for specific performance of a contract against the seller. He can recover specific goods if court orders.

II) DUTIES OF THE BUYER OR RIGHTS OF THE SELLER: –

Following are the duties of the buyer towards the seller.

1) Duty to accept delivery and pay for them (S. 31): –

It is the duty of the buyer to accept the delivery and pay for them.

2) Duty to apply for delivery (S. 35): –

Apart from any express contract, it is the duty of a buyer to apply for the delivery.

3) Duty to pay for goods accepted under wrongful delivery (S. 37): –

If the buyer accepts short delivery or excess delivery of goods, he must pay for them.

4) Duty to accept installment delivery (S. 38): –

Where there is a contract for the sale of goods in installments, the buyer is under a duty to accept installment delivery and pay for that.

5) Duty to take the risk of deterioration (S. 40): –

In the absence of a contract to the contrary, the buyer has to take the risk of deterioration of the goods in transit.

6) Duty to give notice of rejection (S. 43): –

When a buyer (having the right to reject goods) rejects the goods, it is his duty to inform the seller of his rejection of goods.

7) Duty on the refusal of proper delivery (S. 44): –

Buyer is liable to seller for any loss or damage to goods due to refusal or negligence in acceptance of goods by the buyer.

8) Duty to pay the price (S. 55): –

It is the buyer’s duty to pay the price of the goods he purchased. In case of negligence or refusal of payment, he may be sued by the seller for damages.

9) Duty to pay damages for non-acceptance (S. 56): –

Where the buyer wrongfully neglects or refuses to accept and pay for goods, the seller may sue him for damages for non-acceptance.

UNPAID SELLER[3].

I. UNPAID SELLER ‘DEFINED’ (S. 45): –

The seller of goods is deemed to be an ‘unpaid seller’: –

a) When the whole of the price has not been paid or tendered, or

b). When a bill of exchange or other negotiable instrument received has been dishonoured.

A seller who has received a part of the price is also an unpaid seller for the remaining part.

II. RIGHTS OF UNPAID SELLER: –

The following are the rights of an unpaid seller: –

1) Right to lien (S. 47): –

An unpaid seller of the goods who is in possession of them is entitled to retain his possession until payment or tender of price in the following cases. Vis-

a) Where the goods have been sold without any stipulation as to credit.
b) Where the goods have been sold on credit, but the term of credit has
c) Where the buyer becomes insolvent.

Where the goods are sold on credit, the right of lien is suspended during the term of the credit. But on the expiry of the term, if the goods are still in the seller’s possession, his lien revives.

2. Right to stoppage in transit[4] (S. 50): –

When a buyer of the goods becomes insolvent, and the seller has parted with the goods, he may stop the goods in transit before reaching the buyer.

In Schotman V. Lankshire Co[5].

The court held that the essence of stoppage in transit is that the goods should be in middleman’s (i.e. transport) possession.

3. Right to resell (S. 54): –

An unpaid seller who has exercised his right of lien or has stopped the goods in transit is clothed with a further right of a resale of the goods.

AUCTION SALE (S. 64).

64 lays down the principles relating to the auction sale.

I. CONCEPT OF AUCTION SALE[6]: –

An ‘auction sale’ is a sale by competitive bidding, normally held in public. The public at which prospective purchasers are invited to make successively increasing bids for the property. The property is then sold to the highest bidder.

II. WHEN IS THE AUCTION SALE COMPLETE?

An auction sale is complete when the auctioneer.[7] announces its completion by the fall of the hammer or any other customary manner. Until then, the bidder[8] has the right to retract his bid[9]. Property passes on the fall of the hammer.[10].

III. SELLER NOT TO BID[11]: –

The seller (principal) does not have the right to bid at the auction, and he cannot employ anyone to bid on his behalf. It is also improper for the auctioneer to knowingly take a bid from the seller or agent. Any controversy with this rule renders the sale fraudulent.[12]If the seller uses pretended bidding to raise the price, the sale is voidable at the buyer’s option.[13].

The seller may, however, expressly reserve the right to bid at the auction, and in that case, bidding by him or on his behalf does not render the sale fraudulent or voidable, provided that he employs only one bidder.[14].

IV. SALE MAY BE SUBJECT TO “RESERVED[15]” OR “UPSET PRICE[16]”: –

The seller may notify the buyer that the sale will be subject to a reserved or upset price. ‘Reserved Price’ means the minimum price the seller has fixed to avoid selling at an unrealistically low price.[17]. Thus, it is the minimum price below which the goods will not be sold in any case. The reserve price may or may not be announced at the

auction. Whether the goods are to be sold or not is reserved.

Whereas upset price is the price which is announced as the lowest price from which bidding is to start. It is to ensure that the goods will not be sold below that price.

Where goods are put up for sale in lots, each lot is prima facie deemed to be the subject of a separate contract of sale.[18].

V. AUCTIONEER’S RIGHT NOT TO ACCEPT ANY BID: –

On the auctioneer’s side, bids may not be accepted, and the auction may be canceled. Even the auctioneer is not bound to sell the articles to the highest bidder except when the sale is without reserve, nor is he bound to hold the auction sale on the day advertised; this advertisement is not an offer but a mere ‘invitation to offer.

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[1] आगाऊ किंवा अपेक्षित करार भंग – प्रत्यक्ष करार पूर्ण करण्याच्या मुदतीपूर्वीच करार भंग निष्चित होणे. [अग्रिम उल्लंघन]

[2] कराराप्रमाणे अंमलबजावणीसाठी दावा करणे. [अनुबंध के अनुसार कार्यान्वयन के लिए मुकदमा करणा]

[3] किंमत न मिळालेला विक्रेता. [बिना दाम वाला विक्रेता।]

[4] प्रवासात माल थांबविणे. [मार्ग में माल रोकना।]

[5] 1867.

[6] लिलावाने माल विक्रीची संकल्पना. [नीलामी द्वारा माल बेचने की अवधारणा।]

[7] Auctioneer a person who conducts an auction.

[8] Bidder is an offeror of a price at an auction.

[9] Bid is an offer of a price, at an auction.

[10] S. 64 (2).

[11] विक्रेत्याने बोली बोलू नये. [विक्रेता को बोली नहीं करनी चाहिए।]

[12] S. 64 (4).

[13] S. 64 (5).

[14] S. 64 (3).

[15] मालाची किमान किंमत निष्चिती. [माल की न्यूनतम कीमत की गारंटी।]

[16] बोलीची किमान रक्कम. [ न्यूनतम बोली राशि।]

[17] S. 64 (5).

[18] S. 65 (1). In Champalal V. Jaigopal 45 Mad. 799.

Court held that, a bidder has the option to withdraw before the acceptance of his bid is symbolized by fall of hammer.