BBA 1st Semester Business Low Notes

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How stoppage in transit is effected

Business Low Notes :-

The right to stop goods in transit may be exercised either by taking actual possession of   the goods or by giving notice of the seller’s claim to the carrier or other person having control   of the goods. The carrier upon such notice being given, is bound to re-deliver the goods to the seller or his agent. The expenses of re-delivery are to be borne by the seller .

Effect of sub-sale or pledge by buyer

The unpaid seller’s right of lien or stoppage in transit is not affected by the buyer’s selling or pledging the goods, unless the seller recognises such sub-sale or pledge.

While the goods are in transit, if the buyer transfers the document of title to the goods or pledges the same to a person taking them in good faith and for consideration then, if the transaction is sale, the right of stoppage in transit is defeated. But if the transaction is a pledge, the seller’s right to stop in transit will be subject to.the pledge.

Right of re-sale

The unpaid seller who has retained possession of the goods in exercise of his right of lien or who has regained possession from the carrier upon insolvency of the buyer can re-sell the goods.

  • if the goods are of a perishable nature without any notice to the buyer; and
  • in other cases after giving notice to the buyer, calling upon him to pay or tender the price within reasonable timer and upon failure of the buyer to do

If the money realised upon such re-sale is not sufficient to compensate the seller, he can sue the buyer for the balance. But if he receives more than what is due to him, he can retain the excess.

Right of re-sale is a limited right

Business Low Notes :-

The seller must give the notice of sale to the buyer and he should be given the first opportunity to pay for fhe goods. A resale does not absolve the buyer from any liabilities to compensate the seller for damages he may have suffered.

The person who buys the goods upon such re-sale gets a good title even if the seller has failed to give notice to the first buyer. The only effect of failure to give notice before selling the goods is that the seller cannot sue the first buyer for damages for breach of contract am must   pay back to the first buyer any profit he had realised from the resale.

(B)    Unpaid Seller’s Rights against the Buyer

An unpaid seller has the following rights against the buyer personally.

  1. Where the property in the goods has passed to the buyer, the seller is entitled to sue for price, whether the possession is with the buyer or the
  2. Where the price is payable on a certain day irrespective of delivery, the seller may sue for the price, if it is not paid on that {lay, although the property in the goods has not passed.
  3. Where the buyer wrongfully neglects or refuses to accept the goods and pay for them, the seller has a right to sue for

Auction Sale

Business Low Notes :-

A sale by auction is a public sale, where goods are offered to be taken by the highest bidder.

It is a proceeding at which people are invited to complete for the purchase of property    by successive offers of advanced sums.

The following rules, as given in section 64 of the Act apply to auction sales:

  1. Where goods are put up for sale in lots, each lot is prima facie deemed to be the subject of a separate contract of
  2. The sale is complete when the auctioneer announces its completion by the fall of the hammer or in any other customary manner; and until such announcement is made, the bidder may retract his bid. A bid by an intending buyer is an offer, it can be withdrawn any time before acceptance, which in an auction occurs by the tail of hammer, or any other customary manner, e.g., one, two, three, or repeating the final offer or bid three times.

Since an offer can be refused, and a bid is an offer, it follows that the auctioneer is not bound to accept the final or any other bid. A lot can be withdrawn after biding has taken place for some time.

  1. A right to bid may be reserved expressly by or on behalf of the seller. If such fight expressly reserved, the seller or anyone person on his behalf may bid at the
  2. Where the sale is not notified to be subject to a right to bid on behalf of the seller it shall not be lawful for the seller to be himself or to employ person to bid at such sale. The auctioneer cannot take any bid from the seller or his nominee. Any sale contravening this rule may be treated as fraudulent by the buyer.
  3. The sale may be notified to be subject to a reserved price, i.e. there may be a price below which the goods will not be sold: The reserve price may be kept
  4. If the seller makes use of pretended bidding to raise the price, the sale is voidable at the option of the


  1. Right to have delivery as per contract -The first right of the buyer is to have delivery of goods as per
  2. Right to repudiate -Unless otherwise agreed the buyer of goods is not bound to accept delivery thereof by
  3. Right to examine -The buyer has a right to examine the goods which he has not previously examined before he accepts them. The seller is bound to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the
  4. Rights against seller for breach of contract -(a) Suit for damages (Sec.57) where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may sue the seller for damages for non-delivery.
  • Suit for damages – If the buyer has paid the price and the goods are not delivered, he can recover the amount
  • Suit for specific performance -The buyer may sue the seller for specific performance of the contract to sell when the goods are specific or The courty may order for the specific performance of the contract.
  • Suit for breach of warranty -Where there is a breach of warranty by the seller, or where the buyer elects or is compelled to treat any breach of condition on the part of the seller as a breach of warranty, the buyer
    • set up against the seller the breach of warranty in diminution or extinction of the price; or
    • sue the seller for damages for breach of [Sec. 59]
  1. Repudition of contract before the date -Where the setter re ludiates iiic contract before the date of delivery, the buyer may either treat the contract as subsisting and wait till the date of delivery, or he may treat the contract as rescined and sue for damages for the This rule is known as the rule of anocipatory breach or contract,
  2. Suit for interest -Where there is breach of contract on the part of the seller and as a result, the price has to be refunded to the buyer, the buyer has alright to claim interest on the amount of the

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