An unpaid seller is a seller of goods who has not been paid in full for them or who has received a cheque or other negotiable instrument that has not been honored. According to the Sale of Goods Act of 1930, a seller of goods is called an “unpaid seller” when the price has not been paid or tendered, or a bill of exchange or other negotiable instrument that was received as conditional payment has been dishonored. The term "seller" here includes any person who is in the position of a seller, such as an agent of the seller to whom the bill of lading has been endorsed, or a consignor or agent who has himself paid, or is directly responsible for, the price. An unpaid seller has certain rights, including:
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Right of Lien: An unpaid seller has the right to retain possession of the goods until payment is made in full. This right can be exercised as long as the seller has possession of the goods, and it depends upon the possession of the goods.
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Right of Stoppage in Transit: If the goods are in transit and the buyer becomes insolvent, the unpaid seller has the right to stop the goods and resume possession of them until payment is made in full.
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Right of Resale: If the buyer fails to pay the price of the goods, the unpaid seller has the right to resell the goods after giving notice to the buyer. The seller can keep the profit if the resale price is higher than the contract price.
An unpaid seller can also sue the buyer for the price of the goods if the buyer has wrongfully neglected or refused to pay as per the terms and conditions of the contract.
