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

Meera agrees to buy 50 bags of rice from Ketan Traders. With Ketan's consent she takes possession of the bags before paying. She sells them to Hari, who takes delivery in good faith and has no notice of any lien or other right of Ketan. What is the effect on Ketan's unpaid seller's lien against Hari?

Ketan's lien is defeated as against Hari. When a buyer lawfully gets possession with the seller's consent and resells to someone acting in good faith without notice of the seller's lien or rights, the sale takes effect as if the lien did not exist.

  1. AThe lien is treated as if it did not exist against HariCorrect
  2. BThe lien continues and Hari must return the bags
  3. CThe lien continues only for half the price
  4. DThe lien survives because Hari did not pay Ketan directly

Explanation

Where a buyer obtains possession with the seller's consent and delivers the goods under a sale to a person who receives them in good faith and without notice of the seller's lien, the transaction has effect as if the lien did not exist. Hari satisfies both conditions. Ketan is left to claim the price from Meera.

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