Unpaid seller

February 17, 2024
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The Sale of Goods Act, 1930, lays down various provisions governing the sale of goods in India. Among these, Section 45 specifically deals with the rights and remedies available to an unpaid seller. This provision is crucial in safeguarding the interests of sellers when buyers fail to fulfil their payment obligations. Understanding the intricacies of Section 45 is essential for both sellers and buyers to navigate commercial transactions smoothly.

Definition of an Unpaid Seller:

Before delving into the rights and remedies, it’s imperative to define who qualifies as an unpaid seller. According to Section 45, an unpaid seller refers to a seller who has not yet received the full payment for the goods sold or the negotiable instrument of payment has been dishonoured.

Rights of an Unpaid Seller:

Right to Withhold Delivery:

An unpaid seller has the right to withhold delivery of goods until payment is made in full.

This right is applicable even if the goods are in possession of the buyer, provided they have not been delivered as per the contract terms.

Right of Lien:

Section 47 of the Sale of Goods Act grants the unpaid seller the right of lien over the goods. This means the seller can retain possession of the goods until payment is received.

The right of lien extends not only to the price of the goods sold but also to any other amount due to the seller under the same contract or any other contract.

Stoppage in Transit:

If the seller learns that the buyer has become insolvent, the unpaid seller can exercise the right of stoppage in transit.

This right allows the seller to resume possession of the goods while they are in transit, provided the seller has parted with possession and the buyer has not yet received them.

Right of Resale:

In cases where the buyer defaults on payment, the unpaid seller has the right to resell the goods.

The resale can be conducted through a public auction or private sale, and any loss incurred due to the resale can be recovered from the defaulting buyer.

Right to Sue for Price:

Section 55 of the Sale of Goods Act empowers the unpaid seller to sue the buyer for the price of the goods if it remains unpaid and the property in the goods has passed to the buyer.

Remedies Available to an Unpaid Seller:

Suit for Damages:

In addition to suing for the price, the unpaid seller can also claim damages for any loss suffered due to the buyer’s default.

Damages may include loss of profit, incidental expenses incurred, and any depreciation in the value of the goods.

Suit for Specific Performance:

If the goods are unique or not readily available in the market, the unpaid seller may seek specific performance of the contract.

This remedy aims to compel the buyer to fulfil their obligation by accepting and paying for the goods as per the contract terms.

Suit for Interest:

If there is a delay in payment beyond the agreed-upon period, the unpaid seller may claim interest on the outstanding amount.

The rate of interest may be specified in the contract or determined by relevant statutory provisions.


Section 45 of the Sale of Goods Act, 1930, serves as a pivotal provision in protecting the interests of sellers in commercial transactions. It delineates the rights and remedies available to an unpaid seller when the buyer defaults on payment. By understanding and adhering to the provisions of this section, both sellers and buyers can ensure fair and transparent dealings, fostering trust and reliability in the marketplace.

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