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

Asha Textiles sold goods to Bharat Mills and gave notice of intention to resell after exercising lien. Bharat Mills failed to pay within a reasonable time. Asha resold the goods at a higher price than the original price. What is the position?

Asha may keep the profit and still claim damages for any loss. Because Asha gave notice of resale and the buyer did not pay within a reasonable time, the buyer has no claim to the profit under the Act's resale provision.

  1. AAsha must give the profit on resale to Bharat Mills
  2. BAsha may keep the profit and recover damages for any loss from Bharat MillsCorrect
  3. CAsha may resell only if the goods are perishable, so the resale is invalid
  4. DAsha may keep the profit, but only if Bharat Mills consents to the resale

Explanation

Under section 54(2), where the seller who exercised lien gives notice of intention to resell and the buyer does not pay within a reasonable time, the seller may resell and recover damages for loss, and the buyer is not entitled to any profit. The profit goes to the buyer only where notice was not given. Perishability is an alternative ground, not a requirement.

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