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CSEET · Business Laws and Management · Elements of Law relating to Sale of Goods

Arun sold goods to Bhavesh and, being unpaid, exercised his right of stoppage in transit. He gave Bhavesh notice of his intention to re-sell. Bhavesh did not pay within a reasonable time, so Arun re-sold the goods at a profit and also suffered a loss on the contract overall that he claims as damages. Which statement is correct?

Arun may recover damages for any loss from Bhavesh, and Bhavesh gets no share of the re-sale profit. Because Arun gave notice of intention to re-sell and the buyer did not pay within a reasonable time, the re-sale is valid. Without notice, the buyer would get the profit.

  1. AArun may recover damages for loss from Bhavesh, and Bhavesh is not entitled to any profit on the re-saleCorrect
  2. BArun may not recover damages, and Bhavesh is entitled to the profit on the re-sale
  3. CArun must hand over the profit to Bhavesh but may still claim damages
  4. DThe re-sale is void because the original sale was not rescinded

Explanation

Under Section 54(2), where the seller who has exercised lien or stoppage gives notice of intention to re-sell and the buyer does not pay within a reasonable time, the seller may re-sell within a reasonable time and recover damages for loss from the original buyer, but the buyer is not entitled to any profit on the re-sale. Entitlement to the profit and loss of damages arises only if no notice was given.

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