TABLE OF CONTENT

Statement of Problem ................................................................................................................... 2

Introduction ................................................................................................................................... 3

Research Questions ....................................................................................................................... 5

Research Objectives ...................................................................................................................... 5

Tentative Chapterization.............................................................................................................. 5

Literature Survey .......................................................................................................................... 6

Books .......................................................................................................................................... 6

Bibliography .................................................................................................................................. 8

Statutes ........................................................................................................................................ 8

Treatises ...................................................................................................................................... 8

Encyclopedia ............................................................................................................................... 8

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 STATEMENT OF PROBLEM
This project aims to understand why one person should have the right of lien. In what condition

the right of lien arises. Why he has to wait till expiry of credit to exercise his right of lien. What

other rights a seller have in case of failure on the part of buyer. Does seller have right to lien if he

hold the goods as Bailee or agent of buyer? Author wants to know what happen if seller has

already delivered some parts of delivery and subsequently buyer failed to pay money or become

insolvent. Further if the seller has exercised his right of lien, can he resale the goods, if he resale

the goods does the new buyer get the good title against the buyer against whom right of lien was

exercised.

2
 INTRODUCTION
Sale is a transfer by mutual assent of the ownership of a thing from one person to another for a
money price.1 Article 2-106(1) of the Uniform Commercial Code defines a contract for sale as
a contract which includes both a present Sale of Goods and a contract to sell goods at a future
point of time.2 Before the Sales of Goods Act 1893 the English Law relating to the sale of goods
was governed almost entirely by the common law. The Sale of Goods Act, 1893 codified part of
the existing law relating to the sale of goods.3 In India, the provisions regulating the contracts of
sale of goods were found in chapter 7 of the Indian Contract Act, 1872.4 In 1930, the Sale of
Goods Act repealed and replaced Ss. 76 to 123 (Chapter 7) of the Indian Contract Act, 1872 to
define and amend the law relating to the sale of goods. 5 This act was a result of the development
of modern commerce.6

A lien is simply a claim against property for payment of debt or fulfillment of some obligation. 7
In Sale of Goods Act lien means right of an unpaid seller8 to retain the goods9 of buyer10 in
failure of terms and condition of contract on the part of buyer.

An early definition of a lien is as follows A lien is right in one man to retain that which is in his
possession belonging to another, till certain demands of him the person in possession are
satisfied. But the unpaid sellers lien is a special or particular lien. Which arise only in the
precise circumstances by the act; it is not general lien for all debts due from the buyer to the
seller11.

At common law it was held that by ceasing to possess in his original character, and agreeing to
possess on the buyers account, the seller abandoned his lien; but if the buyer become insolvent,
the right of lien was held to revive. The unpaid seller will not lose either his possession or lien
1
HALBURYS LAW OF ENGLAND, FOURTH EDITION, 2005 REISSUE, VOL. 41: SALE OF GOODS AND SUPPLY OF
SERVICES, PG. 13.
2 AMERICAN JURISPRUDENCE 2D, VOLUME 67: REWARDS TO SALES, 67 AM JUR 2D, PG. 285.
3 HALBURYS LAW OF ENGLAND, FOURTH EDITION, 2005 REISSUE, VOL. 41: SALE OF GOODS AND SUPPLY OF
SERVICES, PG. 16.
4 POLLOCK AND MULLA, THE SALE OF GOODS ACT, 8TH EDN, 2011, PG. 2.
5 POLLOCK AND MULLA, THE SALE OF GOODS ACT, 8TH EDN, 2011, PG. 1.
6 POLLOCK AND MULLA, THE SALE OF GOODS ACT, 8TH EDN, 2011, PG. 2.
7 WORD AND PHRASES, PERMANENT EDN., VOL. 25, PG. 319
8 SECTION 45, THE SALE OF GOODS ACT 1930.
9 SECTION 2(7), THE SALE OF GOODS ACT 1930.
10 SECTION 2(1), THE SALE OF GOODS ACT 1930.
11 BENJAMINS SALE OF GOODS, 6TH EDN. 2002, PG 753, PARA 15-028

3
merely because the buyer agrees to pay warehouse charges for goods retained by him on his
premises.12

The unpaid seller has right to lien on goods for the price while he is in possession of them. 13 If
once the possession has given to buyer or his authorized agent he is not entitled to retain goods.
The unpaid seller is entitled to retain the goods until the payment or tender of the price in the
following cases namely-

a) Where the goods have been sold without any stipulation as to credit;14

b) Where goods have been sold on credit, but the term of credit has expired;15

c) Where buyer becomes insolvent.16

12
POLLOCK AND MULLA, THE SALE OF GOODS ACT, 9TH EDN., PG 339-340
13
SECTION 46(A), THE SALE OF GOODS ACT 1930.
14
SECTION 47(A), THE SALE OF GOODS ACT 1930.
15
SECTION 47(B), THE SALE OF GOODS ACT 1930.
16
SECTION 47(C), THE SALE OF GOODS ACT 1930.

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 RESEARCH QUESTIONS
1) When lien arise? Till what extent it exist?
2) What is the effect of part delivery on right of lien?
3) When lien is terminated?
4) What is effect of Decree for price on right to lien?
5) What is effect of exercise by seller his right of lien?

RESEARCH OBJECTIVES
1) To analyze the concept of lien and rights of seller and buyer in lien.
2) To analyze when lien arises and how it is exercised.
3) To understand the consequence of non-payment or insolvency on goods already sold.

TENTATIVE CHAPTERIZATION

CHAPTER I: SELLERS LIEN- This chapter will briefly describe the right of seller to retain
the goods if he is not paid as the terms and condition of contract.

CHAPTER II: EXITENCE OF LIEN - This chapter will discuss briefly that when lien arises
and till what extent it exist.

CHAPTER III: SALE ON CREDIT AND RIGHT OF LIEN This chapter first discuss the
sale on credit and afterward the right of lien during the period of credit and after the expiry of
credit.

CHAPTER IV: LIEN BASED ON POSSESION - This chapter will discuss how right of lien
is depended on possession and what happen when possession shifted.

CHAPTER V: SELLER IN POSSESION AS BAILEE OF BUYER - This chapter will

analyze the idea of seller as Bailee of the buyer until buyer take the delivery.

5
Chapter VI: PART DELIVERY AND RIGHT OF LIEN- This chapter will discuss the effect
of part delivery on sellers right of lien and what happen when some goods are not delivered and
buyer become insolvent.

CHAPTER VII: TERMINATION OF LIEN This chapter describe the ways in which the
right of lien is terminated.

CHAPTER VIII: EFFECT OF DECREE FOR PRICE ON RIGHT OF LIEN- In this

chapter it is discussed that what happen if seller obtained the decree for price.

CHAPTER IX: EFFECT OF EXERCISE BY SELLER HIS RIGHT OF LIEN- This

chapter will discuss that if seller has exercised his right of lien then what happen to goods when
he resale, does the buyer get good title against whom the right of lien is exercised.

CHAPTER XI: CONCLUSION

LITERATURE SURVEY

Books
1) (THE SALE OF GOODS ACT) by POLLOCK AND MULLA17-
The book originally authored by Sir Frederick Pollock & Sir Dinshaw Fardunji Mulla,
provides a section-wise study of the Sale of Goods Act, 1930 in light of judicial and
legislative developments. The commentary also compares the provisions of the Indian
Act with the relevant sections of the English Act. The new edition covers case law
developments in India and UK on the subject. This books discuss lien in whole and
addresses these questions:-
a) When a person can retain the goods he already sold?
b) What happen when the seller has partly delivered goods to buyer and afterward the
buyer failed to make payment according to the contract or become insolvent?
c) How the right of lien is terminated by the conduct of the seller or express agreement
between buyer and seller.

17
POLLOCK AND MULLA, THE SALE OF GOODS ACT, 9TH EDN.

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 d) What happen if the buyer failed to pay the money and the seller obtain the Decree of
price, Does the Decree of price destroyes his right of lien against goods or his right of
lien continues.
e) What is position of buyer if he possesses the sold goods of buyer? Is he liable for any
damage to the goods, when he can exercise his right of lien?
f) If the seller has exercised his right of lien, does the contract continue or end, does the
buyer get good title after resale against whom the seller exercised his right of lien.

2) (BENJAMINS SALE OF GOODS)18

Benjamins Sale of Goods provides practitioners with comprehensive advice on case
law and legislation regarding sale of goods in the UK and globally. Part of the Common
Law Library, this title has established itself as the premier publication on sale of goods
and is frequently cited in court due to its depth and coverage. First published in 1868, this
title is now seen as a must-have purchase for its core readership of commercial
practitioners in medium and large-firms, academics and commercial barristers. Covers
the needs of practitioners interested in all areas of sale of goods case law. Includes clearly
defined and structured content, with separate sections for Nature and formation of the
Contract of Sale, Property and risk, Performance of the contract, Defective goods,
Consumer Protection, Remedies, Overseas Sales, Conflict of laws.
Mainly it provides:-
a) It provides a comprehensive explanation of the law of sale of goods, including terms
and conditions, rights and obligations.
f) Sets out the nature and formation of the contract of sale.
g) Includes discussion of unfair contract terms in commercial and consumer sales.
h) Details the remedies available when disputes arise.
It describe the lien in whole. It clearly discuss how lien is arise and till what extent it
existed. This book thoroughly describe how an unpaid seller can exercise his right of lien
and what other remedies he has in case of failure on part of buyer.

18
BENJAMINS SALE OF GOODS ACT, 6TH EDN., 2002

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 BIBLIOGRAPHY

Statutes

THE SALE OF GOODS ACT 1930. ................................................................................................. 3, 4

Treatises

POLLOCK AND MULLA, THE SALE OF GOODS ACT, EIGHTH EDITION, 2011, PG. 1. .......................... 3

POLLOCK AND MULLA, THE SALE OF GOODS ACT, EIGHTH EDITION, 2011, PG. 2. .......................... 3

Encyclopedia

AMERICAN JURISPRUDENCE 2D, VOLUME 67: REWARDS TO SALES, 67 AM JUR 2D, PG. 285. .......... 3

HALBURYS LAW OF ENGLAND, FOURTH EDITION, 2005 REISSUE, VOL. 41: SALE OF GOODS AND

SUPPLY OF SERVICES, PG. 13........................................................................................................ 3

HALBURYS LAW OF ENGLAND, FOURTH EDITION, 2005 REISSUE, VOL. 41: SALE OF GOODS AND

SUPPLY OF SERVICES, PG. 16........................................................................................................ 3

WORD AND PHRASES, PERMANENT EDN., VOL. 25..........................................................................3