Introduction to Unpaid Seller, Buyer Against the Seller
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The place where we can find buyers and sellers is nothing but the market. To make the selling of goods ethical and fair practices, a new act called the sales of goods act came into force on 1st July of 1930. The sales of goods act consist of all the contracts and agreements between the sellers. Also, it specifies the phenomenon of reciprocal promises. But the reciprocal promises were first initiated in the Indian contract act 1872 itself.
Generally, the seller has to provide goods to his customer, and this buyer needs to pay the exact amount for which he received the goods. If it is done normally, there is no need for the laws. So if any malpractices or mistakes may take place, the act specified certain rights of the unpaid seller against the buyer. We will see those rights in detail.
Unpaid Seller
If a seller, who is unable to get the payment even after delivering the goods and also if the seller fails to receive either money or instrumental benefit in return of his goods due to misleading of the buyer is known as an unpaid seller. So to make proper Justice to the unpaid seller, the sales of goods act provided two kinds of Rights. They are-
Rights of unpaid seller against the buyer and
Rights of unpaid sellers against the goods.
Rights of the Seller against the Buyer
Suit for Price: It is the first and foremost right of an unpaid seller against the buyer. It is used whenever the seller has delivered all his goals to the buyer, and the buyer refuses to pay the amount then he can make use of his right and file a case against the buyer by suing for price. The sales of goods act clearly to explain that the seller has to receive the payment from the buyer after delivering the goods.
Suit for Damages: This right is beneficial to the seller when the buyer refuses to take the goods, and it causes certain damage to the goods then the seller can file against the buyer for the damage of goods because of his non-acceptance. For instance, food products, dairy products will get damaged if the buyer refuses to take them, once the order has been placed.
Suit for Interest: Generally, the buyer and seller will make a contract or agreement to provide goods at one particular time, and the payment will be made after being sure. Of time with interest rate. This contract is made with the acceptance of both parties. But if the buyer refuses to pay interest or less rate of interest during the time of payment, then the seller has a right to sue for the interest for goods that he has delivered earlier.
Rejection of Contract: If the buyer refuses to continue the contract or if he rejects the contract in the middle itself without any prior notice and genuine reason, the seller has the right to sue for the contradiction of the contract before the due date. It is also available in the Indian contract act due to the name of anticipatory breach of contract. Breach of contract means quitting either of the parties from the contract without any reason or any information.
Significance of the Rights of Buyers and Sellers
These are the various rights of an unpaid seller again as to the buyer. Besides these rights, the sales of goods act also specify certain remedies of the buyer against the seller. Because every time there is an equal chance of misleading the contract by both sellers as well as buyers. So to protect the buyer also, the ACT provides specific remedies of the buyer against the seller. Let's try to understand those remedies in detail.
Remedies of the Buyer Against the Seller
Sue for Damage: The buyer also has the option to sue for damage or can sue for non-delivered goods in the specified time by the seller. Because without goods, the buyer fails to perform his required activity at that time.
Performance-Based Suit: If the seller refuses to deliver the goods or he may breach the contract before the due date, then the buyer can take help from the court to file a case against the seller.
Suit for Warranty: If the seller promises to provide the goods with a specific warranty and fails to do it or refuses to do it while delivering the goods, then the buyer can sue for the warranty as well as can reduce the amount to be paid for the goods.
Repudiation of Contract: It is common for both the seller as well as the buyer. Similar to the seller, the buyer also can have an equal chance to file against the seller if he refuses to continue the contract or he breaches the contract in the middle or before the due date.
Sue for the Interest: The buyer has the right to claim for the interest for damaged goods or for the delay in delivering the goods against the seller.
Hence we can understand the rights of an unpaid seller against the buyer and also the remedies of the buyer against the seller.
FAQs on Rights of Unpaid Seller Against Buyer
1. Give an Introduction to the Rights of Unpaid Sellers against Buyers.
A seller is obligated to provide the products sold under every contract of sale, and the buyer is obligated to pay the requisite amount established or quid pro quo, i.e. something in exchange, according to the contract of sale. According to Section 2(f) of the Indian Contract Act, this is known as a 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. Head over to Vedantu to learn more.
2. How can an Unpaid Seller File a Lawsuit for Price against the Buyer?
The vendor 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 breach of contract. The unpaid seller's rights are in addition to his rights against the goods he sold.
Lawsuit according to the price: When goods are passed on to the buyer and the buyer fails to pay according to the contract's terms and conditions, the seller may sue him under Section 55(1), since once the property is passed, the buyer is obligated to pay the price.
3. How can an Unpaid Seller File a Lawsuit for Damages against the Buyer?
If the buyer refuses to accept the products and pay the money, the seller can sue him for non-acceptance damages under Section 56. Sections 73 and 74 of the Indian Contract Act are used to determine the number of damages.
If the items have a ready market, the seller must resell them, and the buyer is responsible for any losses incurred. If the seller fails to resell the items, the difference between the contract price and the market price on the day of the breach is used to calculate damages. If the difference between them is zero, the seller receives nothing.
4. How can an Unpaid Seller File a Lawsuit for Interest against the Buyer?
The seller may collect interest from a buyer if there is a formal agreement between buyer and seller about interest on the price of goods from the day payment becomes due, as specified in Section 61. If such an agreement does not exist - the seller has the right to charge interest from the day he brings it to the attention of the buyer. On the contrary, if there is no contract. The court of law can award the seller interest based on the price from the due date at a rate it deems appropriate.
5. Explain just One Right of a Buyer against the Seller.
One of the rights of a buyer against the seller is:
Non-Delivery Damages: When a vendor fails or refuses to provide goods to a buyer, the buyer has the right to sue for non-delivery of goods under Section 57. If the buyer has paid any money, he has the right to get it back. The amount of damages is determined by market forces, and damages are calculated using the contract and market price on the day of the breach. If the buyer wishes to claim damages, he must do so in a court of law; otherwise, he will be limited to a refund of the amount already paid. Instead of waiting for the market to fluctuate, the buyer should endeavor to limit the loss to a minimum by obtaining the goods from other sources. Go to the Vedantu app and website for free study materials.
6. What are the Features of an Unpaid Seller?
Characteristics of an Unpaid Seller-
Here we are specifying certain features of an unpaid seller to get a better understanding of him. They are-
If the seller fails to get payment after delivering the goats.
If the seller gave you credit to the buyer by trusting him and failed to receive the return on that particular payment time.
If the payment to the seller is made partially, it is also known as an unpaid seller.
If the seller makes an agreement to get an instrumental benefit in the exchange of goods but fails to get it because of the dishonour of the buyer.
7. What is the difference between a Seller and an Unpaid Seller?
Firstly a person who sells his goods to earn profit in return is termed as a seller. And the receiver of those goods is known as the buyer.
On the other hand, if a seller, who is unable to get the payment even after delivering the goods and also if the seller fails to receive either money or instrumental benefit in return of his goods due to misleading of the buyer is known as an unpaid seller. So to make proper Justice, the sales of goods act provided two kinds of Rights for both sellers and buyers.
8. Explain the Rights of an Unpaid Seller with an illustration.
If the buyer has placed an order of 10 L of milk from the seller. Then the buyer refuses to take the order at the time of delivery. So the milk is a dairy product which cannot be stored for a longer time as it may get damaged, the seller has lost the payment as well as milk. At this moment, the unpaid seller has a right to file against the buyer by approaching the court and sue for his damage to goods. This is the best example to explain the rights of an unpaid seller against the buyer.
