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

Nair Metals, an unpaid seller, has not assented to any sub-sale. The buyer, Dutta Ltd., sells the goods to Kapoor Ltd. while the goods are still in Nair Metals' possession and no document of title has been issued. What is the effect of this sub-sale on Nair Metals' right of lien?

Nair Metals' lien is not affected by the sub-sale. The unpaid seller's rights survive a buyer's resale unless the seller assented to it. The exception for a document of title transferred in good faith does not arise here, because no document was issued.

  1. AThe lien is lost as soon as the sub-sale is made
  2. BThe lien is not affected by the sub-sale, since Nair has not assented to itCorrect
  3. CThe lien continues only if Kapoor Ltd. agrees to it
  4. DThe lien is converted into a right to sue Kapoor Ltd. for the price

Explanation

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 to it. The exception for transfer of a document of title to a good-faith buyer for consideration does not apply since no document was issued. Hence the lien survives.

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