Rights of Unpaid Seller (1525-1535)

Question 1

When is a seller of goods considered an UNPAID SELLER?(Art. 1525)

Answer 1

(a) When the whole of the price has not been paid or tendered;
(b) When a bill of exchange or other negotiable instrument has been received as CONDITIONAL PAYMENT, and the condition on which it was received has been BROKEN by reason of the DISHONOR of the instrument, the INSOLVENCY of the buyer, or otherwise.

Question 2

For the provisions on unpaid seller, who can be considered as a SELLER? (Art. 1525)

Answer 2

(a) an agent of the seller to whom the bill of lading has been indorsed; or
(b) a consignor or agent who has himself paid, or is directly responsible for the price; or
(c) any other person who is in the position of a seller.

Question 3

What are the rights of an UNPAID SELLER? (Art. 1526)

Answer 3

(a) A lien on the goods or right to retain them for the price while he in possession of them;
(b) In case of the insolvency of the buyer, a right of stopping the goods in transitu after he has parted with the possession of them;
(c) A right of resale as limited by this Title;
(d) A right to rescind the sale as likewise limited by this Title.
* (e) Right to withhold delivery

Question 4

What are the cases where the seller is still in possession of the goods entitled to RETAIN POSSESION OF THEM (until tender of payment)? (Art. 1527)

Answer 4

(a) Where the goods have been sold without any stipulation as to credit;
(b) Where the goods have been sold on credit, but the term of credit has expired;
(c) Where the buyer becomes insolvent.

Question 5

In case of partial delivery, may the unpaid seller exercise his right of lien on the remainder? (Art. 1528)

Answer 5

Yes.

Unless, such part delivery has been made under such circumstance as to show an intent to waive the lien or right of retention.

Question 6

When does the unpaid seller loses his lien over the goods? (Art. 1529)

Answer 6

(a) When he delivers the goods to carrier or other bailee for the purpose of transmission to the buyer WITHOUT reserving the ownership in the goods or the right to the possession thereof;
(b) When the buyer or his agent lawfully obtains possession of the goods;
(c) By waiver thereof.

Question 7

Right of stoppage (Art. 1530)

Answer 7

[the seller] may resume possession of the goods at any time while they are in transit, and he will then become entitled to the same rights in regard to the goods as he would have had if he had never parted with the possession.

Question 8

When can it be said that the goods are in transitu? (Art. 1530)

Answer 8

(a) From the time when they are delivered to a carrier by land, water, or air or other bailee for the purpose of transmission to the buyer UNTIL the buyer, or his agent in that behalf, takes the delivery of the from such carrier or other bailee;
(b) If the goods are REJECTED by the buyer, and the carrier or other bailee continues in possession of them, even if the seller has refused to receive them back.

Question 9

When can it be said that the goods are NO LONGER in transitu? (Art. 1530)

Answer 9

(a) If the buyer, or his agent in that behalf, obtains delivery of the good before their arrival at the appointed destination;
(b) If, after the arrival of the goods at the appointed destination, carrier or other bailee acknowledges to the buyer or his agent that he holds the goods on his behalf and continues in possession of them as bailee for the buyer or his agent; and it is immaterial that further destination for the goods may have been indicated by the buyer; (Attornment of bailee)
(c) If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent in that behalf.

Question 10

What if the carrier is chartered by the buyer? (Art. 1530)

Answer 10

[It depends] whether they are in possession of the carrier as such or as agent of the buyer.

Question 11

In case of part delivery, when does a seller is PRECLUDED from stopping the goods in transitu? (Art. 1531)

Answer 11

[When] such part delivery has been under such circumstances as to show an agreement with the buyer to give up possession of the whole of the goods.

Question 12

How is the RIGHT OF STOPPAGE effected? (Art. 1532)

Answer 12

(a) By obtaining actual possession of the goods;

(b) By giving notice of his claim to the carrier or other bailee in whose possession the goods are.

Question 13

For the purpose of exercising the right of stoppage, to whom must notice be given? (Art. 1532)

Answer 13

(a) Person in actual possession of the goods; or
(b) to his Principal.

In the latter case, the notice, to be effectual, must be given at such time and under such circumstances that the principal, by the exercise of reasonable diligence, may prevent a delivery to the buyer.

Question 14

What is the duty of the carrier given notice to stop the goods in transitu? (Art. 1532, par. 2)

Answer 14

He must redeliver the goods to, or according to the directions of the seller.

The expenses of such delivery must be borne by the seller.

If, however, a negotiable document of title representing the goods has been issued by the carrier or other bailee, he shall NOT be obliged to deliver or justified in delivering the goods to the seller UNLESS such document is first surrendered for cancellation.

Question 15

When can an unpaid seller having a right of lien or having stopped the goods in transitu, RESELL THE GOODS? (Art. 1533)

Answer 15

(a) The goods are PERISHABLE;
(b) The seller expressly reserves the right of resale in case the buyer should make default; or
(c) The buyer has been in default in the payment of an unreasonable time.

Question 16

When notice of the sale to the original buyer is significant? (Art. 1533)

Answer 16

[When] the right to resell is not based on the perishable nature of the goods or upon an express provision of the contract of sale…

The giving or failure to give such notice shall be relevant in any issue involving the question whether the buyer had been in default for an unreasonable time before the resale was made.

Question 17

What is the effect of resell? (Art. 1533)

Answer 17

[The seller] shall not thereafter be liable to the original buyer upon the contract of sale or for any profit made by such resale, but may recover from the buyer damages for any loss occasion by the breach of the contract of sale.

Where a resale is made, as authorized in this article, the buyer acquires a good title as against the original buyer.

Question 18

When can the unpaid seller rescind the transfer of the title and resume ownership in the goods?(Art. 1534)

Answer 18

(a) Where he expressly reserved the right to do so in case the buyer should make default; or
(b) Where the buyer has been in default in the payment of the price for an unreasonable time.

Question 19

Effect of rescission by the unpaid seller? (Art. 1534)

Answer 19

The seller shall not thereafter be liable to the buyer upon the contract of sale, but may recover from the buyer damages for any loss occasioned by the breach of the contract.

Question 20

How is the rescission by the unpaid seller effected? (Art. 1534 par. 2)

Answer 20

The transfer of the title shall not be held to have been rescinded by an unpaid seller until he has manifested by notice to the buyer or by some other overt act an intention to rescind.

It is not necessary that such overt act should be communicated to the buyer, but the giving or failure to give notice to the buyer of the intention to rescind shall be relevant in any issue involving the question whether the buyer had been in default for an unreasonable time before the right of rescission was asserted.

Question 21

In the case there was a sale or other disposition of the goods, will it preclude the unpaid seller from asserting his rights? (Art. 1535)

Answer 21

No, they will not be affected.

Unless, the seller has assented thereto.