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

Kiran Exports sold specific goods to Lal Ltd, who then sold them to a third party. Kiran had not assented to the sub-sale and still holds lien. What is the effect of the sub-sale on Kiran's right of lien?

Kiran's lien is unaffected. A sub-sale by the buyer does not defeat the unpaid seller's lien or stoppage in transit unless the seller assented to it, and Kiran did not assent, so the right continues.

  1. AThe lien is lost because of the sub-sale
  2. BThe lien is unaffected, as Kiran did not assent to the sub-saleCorrect
  3. CThe lien is suspended until the third party pays
  4. DThe lien continues only if a document of title was issued to Lal Ltd

Explanation

Section 53(1) says the unpaid seller's right of lien or stoppage in transit is not affected by any sale or disposition by the buyer unless the seller has assented. The exception about a document of title applies only when a document has been transferred in good faith for consideration, which is not the case here.

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