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CMA Foundation · Fundamentals of Business Laws and Business Communication · Sale of Goods Act, 1930

Iyer & Sons, an unpaid seller, exercised its right of lien over goods sold to Banerjee Ltd. and gave Banerjee notice of its intention to resell. Banerjee did not pay within a reasonable time, so Iyer resold the goods at a profit. Which statement is correct?

Iyer & Sons may recover damages for any loss from Banerjee, but Banerjee has no claim to the resale profit. Because notice of intention to resell was given and the buyer did not pay in reasonable time, the seller's resale is valid.

  1. ABanerjee is entitled to the profit, and Iyer cannot claim damages
  2. BIyer may recover damages for any loss from Banerjee, but Banerjee is not entitled to any profit on the resaleCorrect
  3. CIyer must hand over the profit to Banerjee and may also claim damages
  4. DIyer's resale is void against the new buyer because Banerjee was not paid

Explanation

Where notice of intention to resell was given and the buyer fails to pay within a reasonable time, the seller may resell within a reasonable time and recover damages for any loss, but the buyer is not entitled to any profit. Banerjee gets no profit, so the option giving it is wrong; the new buyer also gets good title.

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