Unpaid Seller (Part-3) - The Sale of Goods Act, 1930 CA CPT Notes | EduRev

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CA CPT : Unpaid Seller (Part-3) - The Sale of Goods Act, 1930 CA CPT Notes | EduRev

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Multiple Choice Questions

1. The unpaid seller has right of stoppage of goods in transit only where the buyer

(a) become insolvent.

(b) refuses to pay price.

(c) acts fraudulently.

(d) all of these.

2. An unpaid seller is having rights against

(a) goods only.

(b) the buyer only.

(c) both goods and buyer.

(d) none of the above.

3. Under which of the circumstances unpaid seller loses his right of lien

(a) by estoppel.

(b) where seller waived the right of lien.

(c) where the buyer or his agent lawfully obtains possession of the goods.

(d) any of the above.
4. When the unpaid seller has parted with the goods to a carrier and the buyer has become insolvent he can exercise

(a) right of lien.

(b) right of stoppage in transit.

(c) right of resale.

(d) none of the above.

5. The essence of a right of lien is to

(a) deliver the goods.

(b) retain the possession.

(c) regain the possession.

(d) none of the above.
6. Which of the following right can be exercised by an unpaid seller against the buyer, who is not insolvent

(a) right of lien.

(b) right of stoppage in transit.

(c) both (a) and (b).

(d) none of the above.

7. Which of the following is a buyer right against the seller in case of breach of contract?

(a) suit for non-delivery.

(b) suit for specific performance.

(c) suit for damages for breach of warranty.

(d) all of the above.

8. An auction sale is complete on the

(a) delivery of goods

(b) payment of price

(c) fall of hammer

(d) none of the above

9. Seller has right of resale where
(a) goods are perishable.

(b) seller has reserved such right.

(c) seller gives notice.

(d) all of these.

10. The aggrieved party can claim only damages in case of breach of warranty.

(a) true

(b) false

11. Under which circumstances, the right of stoppage can be exercised by an unpaid seller

(a) the buyer has become insolvent.

(b) the goods are in transit.

(c) the seller must be unpaid.

(d) all of the above.

12. Under which circumstances the unpaid seller can exercise right of re-sale

(a) when the goods are of perishable nature.

(b) when he gives notice to the buyer.

(c) when he gives notice to the buyer of his intention to re-sale and the buyer does not within a reasonable time pay the price.

(d) both (a) and (c).

13. Where the seller wrongfully neglects to deliver the goods to the buyer, then the buyer

(a) cannot sue the seller for damages for non-delivery.

(b) may sue the seller for damages for non-delivery.

(c) either (a) or (b).

(d) none of the above.

14. Where the buyer is deprived to goods by their true owner, then the buyer

(a) may recover the price for breach of the condition as to title.

(b) can not recover the price for breach of the condition as to title.

(c) either (a) or (b).
(d) none of the above.

15. Where the buyer wrongfully neglects or refuses to accept and pay for the goods,

(a) the seller may sue buyer for damages for non-acceptance.

(b) the seller cannot sue buyer for damages for non-acceptance.

(c) the seller can sue buyers’ banker for damages.

(d) none of the above.

16. In an auction sale, the property shall be sold to the

(a) Lowest bidder.

(b) Highest bidder.

(c) All bidders.

(d) None of the above.

17. In an auction sale, if the seller makes use of pretended bidding to raise the price, then the sale is
(a) valid.

(b) void.

(c) voidable.
(d) illegal.

18. In which of the following cases, the unpaid seller loses his right of lien?

(a) delivery of goods to buyer.

(b) delivery of goods to carrier.

(c) tender of price by buyer.

(d) all of these.

19. The bidder at an auction sale can withdraw his bid

(a) any time during auction.

(b) before fall of hammer.
(c) before payment of price.

(d) none of these.

20. Where in an auction sale, the seller appoints more than one bidder, the sale is

(a) void.

(b) illegal.

(c) conditional.

(d) voidable.

21. Where in an auction sale notified with reserve price, the auctioneer mistakenly knocks down the goods for less than the reserve price, then the auctioneer is

(a) bound by auction.

(b) not bound by auction.

(c) liable for damages.

(d) both (a) and (c).

Answers to MCQ’S

1

(a)

2.

(c)

3.

(d)

4.

(b)

5.

(b)

6.

(a)

7.

(d)

8.

(c)

9.

(d)

10.

(d)

ii.

(d)

12.

(d)

13.

(b)

14.

(a)

15.

(a)

16.

(b)

17.

(c)

18.

(d)

19.

(b)

20.

(d)

21.

(b)










Theoretical Questions

Question 1: Explain the provisions of law relating to unpaid seller’s ‘right of lien’ and distinguish it from the “right of stoppage the goods in transit”.

Question 2: What do you understand by 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?

Question 3: When can an unpaid seller of goods exercise his right of lien over the goods under the Sale of Goods Act? Can he exercise his right of lien even if the property in goods has passed to the buyer? When such a right is terminated? Can he exercise his right even after he has obtained a decree for the price of goods from the court?

Answer to Theoretical Questions

1: Right of lien of an unpaid seller The legal provisions regarding the right of lien of an unpaid seller has been stated from Sections 47 to 49 of the Sale of Goods Act, 1930 which may be enumerated as follows :

(i) According to Section 47 the unpaid seller of the goods who is in possession of them is entitled to retain possession of them until payment or tender of the price in the following cases namely:

(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 expired; or

(c) where the buyer becomes insolvent.

The seller may exercise his right of lien not withstanding that he is in possession of the goods as agent or bailee for the buyer.

(ii) Section 48 states that where an unpaid seller has made part delivery of the goods, he may exercise his right of lien on the remainder, unless such part delivery has been made under such circumstances as to show an agreement to waive the lien.

(iii)  According to Section 49 the unpaid seller loses his lien on goods:

(a) when he delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer without reserving the right of disposal of the goods.

(b) when the buyer or his agent lawfully obtains possession of the goods;

(c) by waiver thereof

The unpaid seller of the goods, having a lien thereon, does not lose his lien by reason only that he has obtained a decree to the price of the goods.

Right of lien and Right to stoppage the goods in transit; distinction:

(i) The essence of a right of lien is to retain possession whereas the right of stoppage in transit is right to regain possession.

(ii) Seller should be in possession of goods under lien while in stoppage in transit-

(i) Seller should have parted with the possession

(ii) possession should be with the carrier and
(iii) Buyer has not acquired the possession.

(iii) Right of lien can be exercised even when the buyer is not insolvent but it is not the case with right of stoppage in transit.

(iv) Right of stoppage in transit begins when the right of lien ends. Thus the end of the right of lien is starting point of the right of stoppage the goods in transit.

2: 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

(a) the whole of the price has not been paid or tendered.

(b) a bill of exchange or other negotiable instrument has been received as conditional payment, and it has been dishonoured.

Right of stoppage of goods in transit

When 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.

However, the right of stoppage in transit is exercised only when the following conditions are fulfilled:

(a) The seller must be unpaid.

(b) The seller must have parted with the possession of goods.

(c) The goods must be in the course of transit.

(d) The buyer must have become insolvent.
(e) The right is subject to provisions of the Act.

3: A lien is a right to retain possession of goods until the payment of the price.  It is available to the unpaid seller of the goods who is in possession of them where

(i) the goods have been sold without any stipulation as to credit;

(ii) the goods have been sold on credit, but the term of credit has expired;

(iii) the buyer becomes insolvent.
The unpaid seller can exercise ‘his right of lien even if the property in goods has passed on to the buyer.  He can exercise his right even if he is in possession of the goods as agent or bailee for the buyer.

Termination of lien: An unpaid seller losses his right of lien thereon

(i) When he delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer without reserving the right of disposal of the goods;

(ii) When the buyer or his agent lawfully obtains possession of the goods.

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