210 Chapter 7The Sale of Goods Act 1979
Ltd has become insolvent. Sanjay phones the carrier and tells them that he is effecting
stoppage in transit. The carrier must return the cars to Sanjay, who must pay the cost of this.
B Ltd’s liquidator can enforce the contract, and so gain possession of the cars, but only
by paying Sanjay the rest of the price (£81,000). If B Ltd’s liquidator does not enforce the
contract, Sanjay will have to refund to the liquidator the £9,000 already received.Stoppage in transit is possible only where the carrier is not the agent of either the buyer or
the seller. If the carrier is the buyer’s agent then delivery will have been made to the buyer.
If the carrier is the seller’s agent, stoppage in transit is not necessary, as the agent should
anyway obey the seller’s instructions to bring the goods back. Stoppage in transit and
the right to a lien apply only where the ownership has already passed to the buyer. Where
ownership has not already passed, s. 39 gives an unpaid seller a very similar right to with-
hold delivery until the full price is paid.The right to resell the goods
In three circumstances s. 48 SGA 1979 gives an unpaid seller the right to resell goods which
have already been sold without breaching the contract with the original buyer. The three
circumstances in which the right of resale arises are as follows:(i) Where the goods are perishable and the original buyer does not pay the price, or tender
the price, within a reasonable time.
(ii) Where the unpaid seller gives the original buyer notice of an intention to resell the
goods and the original buyer does not pay the price within a reasonable time.
(iii) Where a term of the contract expressly gives the unpaid seller a right to resell the goods.It should be noticed that the original buyer’s insolvency does not give the unpaid seller
the right to resell. The buyer’s liquidator might choose to pay the full price and enforce the
contract.Example
Sinead sells a tonne of bananas to Barbara for £400. Barbara is not granted credit. Sinead
asks for the price but Barbara does not pay it. Sinead exercises a lien over the bananas
and refuses to let Barbara have possession of them. Sinead tells Barbara that the bananas
must be paid for as they are beginning to over-ripen. Barbara still does not pay the price or
tender it. Sinead can resell the bananas to Charlene, without breaching the contract with
Barbara.If the seller exercises the right of resale this terminates the contract with the original buyer.
If the seller resells the goods for a higher price than was agreed with the original buyer then
the seller can keep the profit. If the seller resells the goods at a lower price than was agreed
with the original buyer then the original buyer must compensate the seller for this loss.
Either way, the seller can sue the original buyer for damages for non-acceptance. If, how-
ever, the price of the sale to the second buyer was the same or higher, the damages would
be nominal only. The seller must return to the original buyer any part of the price which has
been paid.