Right of Lien of an Unpaid Seller

 Under the Sale of Goods Act, 1930, an unpaid seller is someone who has not been paid the full price of the goods sold. The Right of Lien (Sections 47–49) is a powerful "possessory" right that allows the seller to keep the goods until the payment is received.

1. Right of Lien

The Right of Lien is the right to retain possession of goods until the buyer pays or tenders the price. It is important to note that this right depends entirely on physical possession; once the seller loses possession, they lose the lien.

2. Conditions under which this Right can be  Exercised (Section 47)

The unpaid seller can exercise this right in the following three circumstances:

• Goods sold without any stipulation as to credit: If the contract doesn't mention a credit period, the seller can refuse to hand over the goods until paid.

• Goods sold on credit, but the term of credit has expired: If the buyer was given 30 days to pay, the seller must deliver the goods during those 30 days. However, if the 30 days pass and the buyer hasn't paid, the seller can exercise the lien on any goods still in their possession.

• Insolvency of the Buyer: Regardless of whether the goods were sold on credit or not, if the buyer becomes insolvent (unable to pay debts), the seller can immediately exercise the lien.

Key Rule: The seller may exercise his right of lien even if he is in possession of the goods as an agent or bailee for the buyer.

3. Part Delivery (Section 48)

If an unpaid seller has delivered a part of the goods, they may exercise the right of lien on the remainder, unless the part delivery was made under circumstances that show an intention to waive the lien on the whole.

4. Conditions of Termination of the Right of Lien (Section 49)

The right of lien is "terminated" (lost) in the following cases:

• Delivery to a Carrier: When the seller delivers the goods to a carrier or other bailee for transmission to the buyer, without reserving the "right of disposal."

• Buyer Acquires Possession: When the buyer or their agent lawfully obtains physical possession of the goods.

• Waiver: When the seller expressly or impliedly gives up their right of lien (e.g., by granting a new credit period after the old one expired).

• Payment: Naturally, once the price is paid in full, the lien disappears.