Right of lien of unpaid seller

Introduction

Section 47 of the Sale of Goods Act has discussed Right of lien.

Lien is the right to retain possession of goods and refuse To deliver them to the buyer until the price due in respect of them is paid or tendered. An unpaid seller in possession of goods sold is entitled to exercise his lien on goods in the following cases-

A) where goods have been sold without any stipulation as to credit

B) where goods have been sold on credit but the term of credit has expired

C) where the buyer becomes insolvent even though the period of credit may not have yet expired.

In the case of buyer's insolvency, the lien exists even though goods had been sold on credit and the period of credit has not yet expired. When the goods are sold on credit the presumption is that the buyer shall keep the credit goods. If before payment the buyer becomes insolvent, the seller is entitled to exercise this right and hold the goods as security for the price. The effect of buyer's insolvency is that all stipulations as to credit are put to an end and the seller has the right of lien.

Unpaid seller's lien

The unpaid seller's lien is a possessory lien that is the lien can be exercised as long as the seller remains in the possession of the goods. He may exercise his right of lien notwithstanding that he has the goods as agent or bailee for the buyer. The seller's lien when the property has not been passed to the buyer is termed as a right of withholding delivery.

As per section 46(2), where the property in goods has not been passed to the buyer, the unpaid seller has in addition to his other remedies, a right of withholding delivery similar to and coextensive with the rights of lien and stoppage in transit where the property has passed to the buyer.

This right to lien can be exercised only for the non-payment of the price and not for any other charges. For example maintenance or custody charges, which the seller may have to incur for storing the goods in the exercise of his lien for the price. This right of lien extends to the whole of the goods in his possession even though part payment for those goods has already been made. 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. Also, the lien can be exercised even though the seller has obtained a decree for the price of the goods. 

When the lien is lost

Lien depends on physical possession of goods. Section 49 says, the unpaid seller of goods loses his lien in the following grounds-

A) when he delivers the goods to a carrier or other bailee for transmission to the buyer

B) when the buyer or his agent lawfully obtained possession of goods

C) when the seller expressly or impliedly waives his right of lien. An implied waiver takes place when the seller grants a fresh term of credit or allows the buyer to accept a bill of exchange payable at a future date or assents to sub-sale which the buyer may have made.