Rights of an Unpaid Seller

Last Updated On -12 Jun 2025

In the realm of business, the flow of products and services is not always flawless. A buyer failing to pay for the acquired items causes one of the most often occurring issues. The Sale of Goods Act of 1930 gives what is known as an unpaid seller some legal rights to guard vendors in such circumstances. These rights guarantee sellers' ability to act specifically against non-paying consumers, therefore avoiding their helplessness.

Let's investigate who is an unpaid seller, what rights they have, and why knowledge of these rights is essential to preserving the fairness of trade.

What is an Unpaid Seller?

An unpaid seller is defined under Section 45 of the Sale of Products Act, 1930, as a vendor who has not been paid the total amount of the products or who received a bill of exchange or another negotiable instrument as conditional payment, but the instrument has been dishonoured. It covers not only the real seller but also any agent or consignee in possession of the items without payment.

Rights of an Unpaid Seller

Maintaining fair trade and commerce depends much on the rights of an unpaid vendor. The Sale of Goods Act of 1930 fosters confidence in commercial transactions by providing sellers with a legal safety net. Whether your field of study is business law or sales and contracts, knowing these rights can help you to make wise and safe transactions.

An unpaid seller's rights fall primarily into two main categories:

Rights Against the Goods: These rights let the unpaid seller take possession or retain items under specific circumstances.

Right of Lien: Section 47–49, under the lien, the vendor is entitled to retain items under her control until the entire amount is paid. This is true when goods are sold without a credit term or otherwise or when the credit period is expired, or when the buyer loses solace. Only if the seller owns the items may this right be used.
Right of Stoppage in Transit (Section 50-52): Should the buyer fall insolvent and the seller has already parted with possession but the items are still in transit, the seller has the right to halt their movement and recover control. This is relevant until the buyer or their agent gets the items.
Resale Right (Section 54): Under specific guidelines, the unpaid vendor is entitled to resale the items, if the goods are perishable or the buyer has still not paid after the seller has notified them of resale, or if the contract specifically reserves the right.

Any excess must be returned to the buyer; reselling can help offset losses.

Rights Opposed to the Buyer Personally: These rights are legal actions the unpaid seller can take directly against the buyer.

Suit for Price (Section 55): If the buyer refuses to pay after ownership of the items has passed to them, the seller may pursue a lawsuit to recover the money in Section 55.
Suit for Damages (Section 56): Should the customer unfairly refuse to accept or pay for the products, the seller may be entitled to damages for breach of contract.
Suit for Interest (Section 61): Allows the seller to demand either as agreed upon in the contract or as required by law.

Did you know?

Early English law outlined the rights of an underpaid seller; India incorporated many of these clauses through the Indian Sale of Goods Act of 1930, which was inspired by the English Sale of Goods Act of 1893.

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Frequently Asked Questions (FAQs)

Can an unpaid seller exert a lien and halt in transit?

Not one. While the seller still owns the items, they can only invoke their right of lien. The right of halt in transportation becomes relevant once the items are passed to a carrier.

Is resale automatic rights?

Not always. Apart from perishable items, the buyer must be informed about the resale. If no notification is made, the seller may forfeit their claim to recoupment of losses.