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Right against the buyer personally

The unpaid seller has certain rights against the buyer and can enforce them through the Court of law. Generally when the seller loses the right against the goods then he resorts to his rights against the buyer. These rights are as follows:

Suit for price

The payment of price is the legal obligation of the buyer. Moreover, on the transfer of ownership of the goods to the buyer, he becomes bound to pay the price to the seller. If he does not pay the price in terms of the contract, the seller may bring a legal action against the buyer for the payment of the price [Sec. 55 (1)].



Amar sold certain goods to Akbar for ₹ 20,000. The price was to be paid after one month. But Akbar failed to pay the price on the due date. In this case, Amar can file a suit against Akbar for the recovery of the price for the goods sold to him.

Suit for damages for non-acceptance of goods

Sometimes, the seller is ready and willing to deliver the goods to the buyer. But, the buyer wrongfully neglects or refuses to accept the goods and pay for them. In such cases, the seller may bring a legal action against the buyer for the recovery of the damages suffered due to the non-acceptance of the goods (Sec. 56). The damages recoverable by the seller are ascertained according to the following rules:
  • When there is a ready market for the goods, the measure of damages is the difference between the contract price and the market price on the date of breach. If the difference between the contract price and market price is nil, the seller can only get nominal damages
  • When the goods do not have any ready market, the measure of damages will depend on the facts of each case. Generally, such damages are awarded which would directly and naturally arise in the ordinary course of events from the breach

Right to repudiate the contract before the due date (Sec. 60)

When either party to the contract repudiates the contract before the date of performance the other party to the contract has two options:
  • Either treat the contract as subsisting and wait till the date of performance or
  • Treat the contract as rescinded and sue for damages

Suit for interest

When there is a specific agreement between the seller and the buyer regarding the interest on the price of the goods from the date on which the payment becomes due, the seller can recover the interest. If there is no such agreement, the seller may give notice to the buyer of his intention to charge interest on the delayed payment.
In absence of contract to the contrary, the rate of interest to be awarded is at the discretion of court. The court may award the interest from the day of tender of goods or from the date on which the price was payable.


Note: The interest can be recovered by the seller only when he is entitled to recover the price. Thus, when the seller’s only remedy is damages, he cannot file a suit for interest.

Rights of the buyer

The contract of sale may be broken by the seller. In that case, the buyer will be the aggrieved party and will be entitled to enforce certain rights against the seller. The following are the rights of the buyer in case of default by the seller:
  • Suit for non-delivery: When the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may sue the seller for damages for non-delivery [Sec. 57].
  • Suit for specific performance:The buyer may file a suit against the seller compelling him to deliver the goods sold to him. Generally the Court awards damages to the aggrieved party and it very rarely grants the order for specific performance.
The court, however, allows the specific performance where the damages would not be an adequate remedy or where it would not be possible to ascertain the actual loss.



When the goods are of unique or of special value such as a rare painting which may not be available in the market, a suit for specific performance may be filed.

  • Suit for breach of warranty: When there is a breach of warranty by the seller, the buyer is not entitled to reject the goods, but can file a suit and claim damages. The law provides that in case of breach of warranty, the buyer has the following remedies (Sec. 59):
    • If the price has not been paid by the buyer, he may deduct the loss suffered by him from the price and pay the balance or
    • If the loss suffered is more than the price, the buyer may file a suit for damages

Meaning of Auction sale

Sale by auction is a public sale where different intending buyers assemble and try to outbid each other. The goods are sold to the highest bidder. The offer of the price is known as a “bid” and the person offering the price is known as “bidder”.
The auctioneer is the agent of the owner of the goods and sells them by auction on his behalf. The relationship between the owner and the auctioneer is that of the principal and agent and is governed by general principles of the Law of Agency.

Procedure for auction

The usual procedure in case of an auction sale is as follows:
  • The proposed auction is duly advertised and a printed catalogue of the goods with the terms of sale is circulated
  • On the appointed day and time, the intending buyers assemble and the auctioneer puts the different lots to auction and invites bid from the intending buyers
  • Every bid is an offer and the auction goes in favour of the highest bidder

Rules regarding auction sale

  • Bid: When a person bids, it is only an offer and his bid (i.e. offer) is deemed to be accepted by the fall of the hammer or by say, calling “one, two, and three”. Before it is accepted, it can be withdrawn.
  • Completion of an auction sale: The sale is complete, when the auctioneer announces its completion by the fall of the hammer or in some other customary manner. For example, saying “one, two and three” or “going, going and gone”

Note: Any rule which does not permit a bidder to withdraw his bid before it is accepted is invalid. It is against the provision of law which provides that an offer can be revoked before it is accepted.



In an auction sale, it was notified that, “bid once made shall not be withdrawn”. One of the bidders, who made a bid wanted to withdraw it before the fall of hammer. Held, he was entitled to withdraw his bid before it was accepted.

  • When the goods are put up for sale in lots: When the goods are put up for sale in lots, each lot is prima-facie deemed to be the subject of a separate contract of sale. The rule can be excluded by an agreement. When a sample out of a large lot is put in the auction sale so the intending buyers can have a knowledge about the product put for auction then, in such circumstances it is clear that the lot displayed are not meant for the purpose of separate sale.
  • Reserve price: It is the lowest price below which the auctioneer will not sell. It is fixed by the auctioneer to protect himself from selling the goods at a low price. Where the sale is notified subject to reserve price, the buyer is bound by the reserve price even if the auctioneer by mistake accepts the bid lower than the reserve price.
  • Knockout agreement: In the case of a knockout agreement, the buyers join their hands to eliminate competition among themselves at an auction sale. A knockout agreement is not illegal. However, if the intention of the parties to the agreement is to defraud a third party, this will be illegal.
  • Damping: It is an illegal act dissuading the intending buyer from bidding. It includes pointing out defects in the goods or misleading the purchaser or doing any other act so that he may not participate in the auction.
  • Seller’s right to bid: The seller or any person on his behalf, duly authorised by the seller, can bid at the auction if the seller’s right to bid is expressly reserved. It may however be noted that the seller can appoint only one bidder on his behalf. If he appoints more than one bidder, the sale is voidable, because in this case, the intention of the seller is not to protect his interest, but to enhance the price.
  • Transfer of ownership: On the completion of sale by the fall of the hammer, the ownership of the goods immediately transfers to the buyer i.e. the highest bidder. The reason for the same is that, the goods being specific and in a deliverable state, the ownership of the goods is transferred to the buyer on the completion of the contract of sale.

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