Rights and Remedies of Unpaid Seller

Unpaid seller

Rights and Remedies of Unpaid Seller: A seller is obligated to provide the products offered, and a buyer is obligated to pay the required amount or quid pro quo, i.e. something in exchange, as stipulated in the contract of sale. According to Section 2(f) of the Indian Contract Act, this is known as reciprocal promise. In other words, reciprocal promises are any set of promises made for the purpose of forming the consideration or part of the consideration for each other, and every contract for the sale of products is made up of reciprocal promises.

When a buyer refuses or fails to pay the required amount to the seller, the seller is considered an unpaid seller and has the right to pursue the buyer. In the event that the buyer breaches the contract, these rights are called seller remedies. These therapies may be used to combat:

• Buyer
• Goods

The seller is regarded an unpaid seller under Section 45(1) of the Sale of Goods Act, 1930, when:

When the whole price has not been paid and the seller has a right of action for the payment immediately.

When a conditional payment is received in the form of a Bill of Exchange or another negotiable instrument, and the pre-requisite condition is not met due to the instrument’s dishonour or otherwise.

A person in a position of seller, such as an agency or a consignor, who has paid or is accountable for the price, is also referred to as a seller.

There is always a reciprocal promise in a deal. Even under a sale contract, both the buyer and the seller must fulfil their obligations. And if the buyer fails to pay the seller what he owes, the seller will become an unpaid seller. This implies that an unpaid seller has legal recourse against the buyer. Let’s see what happens.

Rights and Remedies of Unpaid Seller Against Buyer

Rights and Remedies of Unpaid Seller: The seller becomes an unpaid seller when the consumer of products does not pay his dues to the seller. The seller now has some legal rights against the buyer. Such rights are the seller’s remedies for the buyer’s violation of contract. The unpaid seller’s rights are in addition to his rights against the items he sold.

1) Price Appropriate

If the property of the products has already transferred to him but he refuses to pay for them, the seller becomes an unpaid seller under the contract of sale. In such a situation, The seller has the right to sue the buyer if he refuses to pay him his due.

However, if the sales contract states that the price will be paid at a later date regardless of when the items are delivered, and the buyer refuses to pay on that day, the unpaid seller may sue for the price of the goods. According to the legislation, the actual delivery of the products is unimportant.

2) Damages for Non-Acceptance Suit

The seller may sue the buyer for damages caused by his non-acceptance of goods if the buyer wrongly refuses or neglects to accept and pay the unpaid seller. The seller may be liable for damages because the customer declined to acquire the items without reasonable reason.

Section 73 of the Indian Contract Act 1872, which deals with damages and penalties, determines the amount of such damages. Consider the situation of seller A. He offers to sell 100 litres of milk to B for an agreed-upon sum. B refuses to take the products on the day for no apparent reason. A is unable to locate a new customer, and the milk spoils. In this instance, A has the right to sue B for damages.

3) Contract Cancellation Before the Due Date

The seller may still seek for damages if the customer cancels the contract before the products are delivered. A deal like this is deemed rescinded, and the seller may sue for breach of contract. This is referred to as Anticipatory Breach of Contract under the Indian Contract Act.

4) Appropriate for Interest

If the parties have agreed to a particular arrangement, the seller might sue the buyer for the interest owed to him. This occurs when the interest rate to be paid to the seller from the day the payment becomes due has been agreed upon by both parties.

However, if the parties do not have such specified provisions, the court may award the seller the interest owed to him at whatever rate it deems appropriate.

Buyer’s Remedies Against the Seller

Rights and Remedies of Unpaid Seller: The seller has the same right to cancel the contract as the seller. The buyer has several remedies against the seller if the seller breaks the contract. Let’s take a look at some of the buyer’s options under the Sales Act.

1) Non-Delivery Damages

If the seller refuses to deliver the items to the customer incorrectly or negligently, the buyer may sue for non-delivery of the goods. According to Section 57 of the Sale of Goods Act, if the buyer suffers losses as a result of the seller’s improper conduct (non-delivery), he has the right to sue for damages.

Consider the case of A, who offers to sell B ten pairs of shoes for $1,000 each. B planned to sell the identical pair of shoes to C for $1100/- each. A fails to deliver the merchandise to B. B may now sue A for failure to deliver. He may sue for 100/- each pair, or a total of 1000/- (the difference between B’s cost and selling price).

2) Appropriate for a Specific Task

If the seller breaks the contract, the buyer may go to court and demand specific performance from the seller. After consideration, the court might order the seller to undertake a certain act. It’s worth remembering that this remedy is only possible if the items are determined or particular.

Example: A and B signed a contract in which A agreed to sell B a very valuable artwork on a certain date. A refuses to sell on the specified day. B may go to court, and the judge will order A to sell the picture to B for the agreed-upon amount.

3) Lawsuit for Warranty Breach

When a seller’s guarantee on products is breached, the buyer cannot simply reject the items on that basis. In this instance, the customer has two choices:

• Set the claimed violation of guarantee against the customer in the extinction of the price.
• Or file a warranty claim against the seller.

4) Contract Repudiation

The buyer does not have to wait until the contract’s expiration date if the seller repudiates the contract. He has the option of treating the contract as rescinded and filing a lawsuit for damages right away. This will be a contract violation that occurs before the contract is signed.

5) Make an Interest Suit

The Act expressly says that nothing in it will alter the seller’s or buyer’s ability to seek interest or special damages owed to them under the contract. If the contract does not include a particular provision, the court may be able to help the injured party.