Understanding the Relationship Between Seller and Buyer
Every sale of goods is based on a contract — an agreement between the seller, who transfers or agrees to transfer goods, and the buyer, who agrees to pay a price in return. Under the Sale of Goods Act, 1930, this contractual relationship gives rise to rights and duties on both sides.
These rights and duties depend on whether the sale is complete or pending. Before the sale, the ownership remains with the seller, whereas after the sale, ownership and risk generally pass to the buyer.
This article explains, in simple terms, the rights and duties of both the seller and buyer, distinguishing clearly between their roles before and after the sale, in light of the Sale of Goods Act, 1930 and the Indian Contract Act, 1872.
Rights of the Seller before and after Sale
1. Rights of the Seller Before Sale
Before a sale is completed, the seller still holds ownership or possession of the goods. Therefore, certain rights protect his interest until payment is made.
(a) Right of Retention (Lien) – Sections 46(1)(a) & 47
The right of lien allows an unpaid seller to retain possession of goods until full payment is made. This right is available when goods are sold without credit, the credit period has expired, or the buyer becomes insolvent.
The lien ensures the seller’s protection when payment has not yet been received.
(b) Right of Stoppage in Transit – Sections 46(1)(b) & 50
If the seller learns that the buyer has become insolvent after dispatching the goods but before delivery, he may stop the goods in transit and retain possession until payment is made.
This right safeguards sellers from losing goods and money simultaneously.
(c) Right of Resale – Section 54
If the buyer defaults in payment, the seller may resell the goods, especially when the goods are perishable or after giving notice of resale. This helps minimize loss due to buyer’s default.
2. Rights of the Seller After Sale
After the sale is completed and ownership passes to the buyer, the seller’s rights mainly involve enforcing payment.
(a) Right to Sue for Price – Section 55
If ownership has transferred and the buyer fails to pay, the seller may sue for the price of goods.
This is a personal remedy ensuring the seller gets what he is legally owed.
(b) Right to Sue for Damages – Section 56
If ownership has not passed, but the buyer wrongfully refuses to accept the goods, the seller can sue for damages for non-acceptance.
(c) Right to Sue for Interest – Section 61
The seller may also claim interest on the price from the due date of payment until realization, depending on contract terms or trade usage.
Duties of the Seller before and after Sale
1. Duties of the Seller Before Sale
Before the sale is completed, the seller must ensure transparency and fair dealing.
(a) Duty to Deliver Conforming Goods
Under Section 37, the seller must deliver goods that match the contract description, quality, and quantity agreed upon.
Delivering defective or different goods constitutes a breach of contract.
(b) Duty to Transfer Title
The seller must have a valid ownership right (title) to transfer to the buyer. Selling goods without ownership may make the contract voidable.
(c) Duty to Take Care of Goods
Until delivery, the seller must take reasonable care of the goods. Any damage or loss caused by negligence before delivery makes the seller liable.
2. Duties of the Seller After Sale
Once the sale is complete and ownership passes, new duties arise.
(a) Duty to Deliver Goods
As per Section 31, the seller must deliver the goods to the buyer as per the contract terms—time, place, and manner must be observed strictly.
(b) Duty to Warrant Quiet Possession – Section 14(b)
The seller implicitly promises that the buyer’s possession will not be disturbed by anyone claiming a better title.
(c) Duty to Pay Damages for Breach of Condition or Warranty
If the seller breaches a condition or warranty, he must compensate the buyer for any resulting loss.
Rights of the Buyer before and after Sale
1. Rights of the Buyer Before Sale
Before ownership is transferred, the buyer still holds certain legal and contractual rights.
(a) Right to Examine the Goods – Section 41
The buyer has the right to inspect and verify that the goods conform to the contract terms before acceptance.
(b) Right to Reject Goods
If the goods do not match the description, quality, or sample agreed upon, the buyer may reject the goods and refuse to pay for them.
(c) Right to Demand Delivery
If payment terms are met, the buyer can demand delivery of goods as per the contract.
2. Rights of the Buyer After Sale
After ownership passes, the buyer becomes entitled to full ownership and possession of goods.
(a) Right to Obtain Possession
Once payment is made, the buyer has the right to take possession of the goods and enjoy their use.
(b) Right to Sue for Non-Delivery – Section 57
If the seller wrongfully refuses to deliver, the buyer can sue for damages for non-delivery.
(c) Right to Sue for Breach of Warranty – Section 59
If the goods are defective or fail to meet a warranty, the buyer can claim compensation or set off damages against the price.
(d) Right to Recover Price Paid
If the contract is void or the goods are not delivered, the buyer can recover the price already paid.
Duties of the Buyer before and after Sale
1. Duties of the Buyer Before Sale
(a) Duty to Accept Delivery – Section 31
The buyer must accept the goods when delivered as per the contract. Refusal without valid reason amounts to a breach.
(b) Duty to Pay Price
Under Section 31, the buyer is bound to pay the price as per contract terms. Payment and delivery are concurrent conditions.
(c) Duty to Take Delivery
If the seller is ready and willing to deliver, the buyer must take delivery within a reasonable time. Failure may make him liable for damages.
2. Duties of the Buyer After Sale
(a) Duty to Bear Risk
Once ownership is transferred, the risk of loss or damage passes to the buyer, even if goods remain in the seller’s possession.
(b) Duty to Pay Damages for Non-Acceptance
If the buyer wrongfully refuses delivery, he must compensate the seller for any resulting loss.
(c) Duty to Take Care of Goods After Delivery
Once goods are received, the buyer must take reasonable care and preserve them properly.
Real-Life Example
Suppose A, a wholesaler, sells 100 laptops to B, a retailer, with payment due on delivery.
Before delivery, the laptops are damaged due to A’s negligence. B can refuse delivery since A breached his duty to take care of goods before sale.
Later, A sells 100 more laptops and delivers them to B, but B fails to pay. Now A becomes an unpaid seller and can exercise lien or sue for the price.
This example illustrates how rights and duties change dynamically before and after a sale is completed.
Mnemonic to Remember the Rights and Duties — “SELL-BUY”
Mnemonic: “SELL-BUY”
Each letter stands for key points to remember.
S – Seller’s Lien (Right of Retention)
E – Examine Goods (Buyer’s Right)
L – Lien and Stoppage in Transit
L – Legal Duty to Deliver Conforming Goods
B – Buyer’s Right to Possession after Payment
U – Unpaid Seller’s Right to Sue
Y – Your Risk after Ownership Transfer
Mnemonic Sentence:
“Sellers Ensure Legal Lien, Buyers Uphold Your Rights.”
This phrase helps recall the core rights and duties of both parties before and after a sale.
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