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

Consider these statements about an unpaid seller who has exercised his right of lien or stoppage in transit. Statement I: The contract of sale is rescinded by the mere exercise of that right. Statement II: If the goods are perishable, the seller may re-sell them within a reasonable time if the buyer does not pay or tender the price within a reasonable time. Which is correct?

Only Statement II is correct. Mere exercise of lien or stoppage in transit does not rescind the contract of sale. However, where the goods are perishable, the unpaid seller may re-sell within a reasonable time if the buyer fails to pay or tender the price within a reasonable time.

  1. ABoth I and II are correct
  2. BOnly I is correct
  3. COnly II is correctCorrect
  4. DNeither I nor II is correct

Explanation

Section 54(1) says a contract of sale is not rescinded by the mere exercise of lien or stoppage in transit, so Statement I is wrong. Section 54(2) allows re-sale within a reasonable time where goods are perishable, if the buyer does not pay or tender the price within a reasonable time, so Statement II is right.

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