Where the buyer defaults in his principle obligation then the seller can claim her/his damages. When parties go to court it can take a long time to sort out court litigation and there are cases that have been pending for the last 6 years. It is therefore important for the seller to consider the best option in enforcing his remedies. There are two remedies for the seller
1. Real Remedy
2. Personal Remedy
Real remedy is that right which the seller has by virtue of being in possession of the goods. He holds the goods as security until the price is paid. Real remedy is only available where the seller has possession where property has passed and he has not delivered the goods to the buyer or he has repossessed the goods. This real remedy is based purely on possession of goods by the seller and as soon as the seller has released possession, the remedy passes. One must be in possession of the goods.
The second remedy has to do with where the seller must be an unpaid seller. The seller is unpaid where he or she has not received the total price. A seller is unpaid if he/she has not received total price or the total price has not been tendered to him/her no matter how small the balance is. The seller is also unpaid when the bill of exchange or negotiable instrument has been dishonoured. Note that the seller includes the seller’s agent.
There is another remedy – the lien.
Lien is the right to retain goods until the whole of price has been either paid or tendered. Note that the seller’s lien does not give the seller any property in the goods but the lien allows the unpaid seller the right to resell the goods subject to certain conditions
1. Seller must be unpaid seller
2. No right to lien if goods are sold on credit and the time for the credit has not expired;
3. The unpaid seller must be in possession of the goods; if for any reason the unpaid seller loses possession of the goods then both real remedy and lien remedy are lost. The two remedies are based on the seller being in possession.
Anytime between delivery of goods to an agent/carrier for onward transmission to the buyer, the unpaid seller has a right to stop the sale of goods, Stoppage in transit. Stoppage in transit applies when the buyer becomes insolvent in which case the seller may resume possession of the goods and he may retain the same until he/she is paid the same price.
Conditions for stoppage in transit
1. The seller must be unpaid,
2. Buyer must be insolvent
3. The goods must be in transit
Vendor v. Carrier
There is a carrier who is obviously an agent of the seller, if for instance the sale of goods contract says that the seller shall deliver the goods to the buyer and the seller loads the goods to vehicle to deliver to the buyer then the goods are still in the seller’s possession. Where the carrier is the agent of the buyer, then immediately the goods are delivered to that carrier, the seller has delivered the goods to the buyer and the stoppage in transit is only applicable where the goods have not reached the buyer. If you can determine that the carrier is the buyer’s agent, the goods have been delivered to the buyer as soon as they are loaded.
Where you have an independent contractor it is your duty to determine whose agent the independent contractor at the time you want to ascertain possession of the goods. Even with the independent contractor, the person who gives the initial instructions is by and large the principal, master and employer.
When you talk of vendor and carrier therefore if the seller gives orders to the carrier and that carrier happens to be the seller’s agent to stop delivery to the buyer and the carrier disobeys the instructions, if the carrier delivers the goods to the buyer he commits conversion. Where the carrier is a common carrier e.g. Malindi bus where you have loaded omena and the bus has left carrying the fish. Somewhere along Mtito you get information that the buyer has been declared bankrupt, who has possession of these goods?
Once the seller has possession either initially or through stoppage in transit, he has a right to resell or hold on the goods and force the buyer to pay, if the buyer cannot afford to pay, the seller can sell the goods if he still has possession and pass a good title to the second buyer. But supposing the unpaid seller after resale makes a profit? Who is entitled to the profit? The profit goes to the unpaid seller not the buyer. It is inequitable that an unpaid seller who is selling the goods because the buyer has defaulted that the seller is entitled to get whatever is over and above. The buyer who has acquired property in the goods without payment and now would want to make a profit of the goods that he has inconvenienced the seller by not paying should not benefit from the subsequent sale of the goods. Even when the seller sells the goods to reclaim his money, he can still sue the buyer for damages.
SELLER’S PERSONAL REMEDIES
Real remedy is that you have the goods and you hold the goods as collateral and force the buyer to pay for the goods before delivery. Suppose you have lost the property and the goods to the buyer and the buyer does not pay?
1. Action for price the unpaid seller is entitled to file a suit claiming the price and/or damages for the breach of the contract by the buyer; suffice it to say that action for damages is only available where property has not passed, where property has passed, one has to prove damage. The seller has already lost that which he had i.e. he has lost property in the goods and unfortunately he might lose possession. So when you file a suit claiming damage, what damage has one suffered and what damages can a court award. It is not prudent for the court to order the buyer to return the goods except in theft where the buyer has acquired goods illegally and the property reverts to the original owner. The bona fide purchaser would lose the title and the goods and the original owner gets back the goods and the good title. Pg 431 Attiyah 9th Edition read it.
Section 51 to Section 54 - REMEDIES HAVE THE BUYER
Like the seller the buyer has rights, which are as follows;
1. The buyer has a right to reject the goods; buyer’s first right or remedy where the seller fails to transfer property or deliver goods; right to reject goods, this goes together with repudiation. Repudiation is only possible when the seller’s breach goes to the root of the contract either because it is a breach of a condition or by its very nature because it renders the contract meaningless. Note that the right to reject is separate from the right to repudiate. When you repudiate you say the contract does not exist but when you reject you are saying yes there was a contract but there is something wrong i.e. the goods are defective etc. if you opt for repudiation you open yourself to all sorts of problems so the prudent buyer would not opt for repudiation but would opt for rejection and then pursue damages. This option is that until a certain reasonable period, there is still time for the seller to deliver conforming goods but when you repudiate you close the door for the seller to make good.