Model Answer
0 min readIntroduction
The Sale of Goods Act, 1930 governs contracts involving the transfer of ownership of goods. Within this framework, bailees (those who possess goods belonging to another) are granted certain rights to protect their interests. Two such rights are the right to lien and the right to stoppage in transit. A lien provides a bailee with the right to retain possession of goods for payment of dues, while stoppage in transit allows a seller (or their agent) to regain possession of goods while they are in the hands of a carrier. The assertion that “Right to stoppage of goods in transit starts when right to lien ends” signifies a sequential relationship between these two rights, which needs to be thoroughly examined.
Understanding Lien
A lien, as defined under the Sale of Goods Act, is the right of a bailee to retain possession of goods belonging to the bailor until certain debts or dues are settled. This right arises when the bailee has provided services or incurred expenses related to the goods.
- Types of Lien: Particular lien (for specific debt) and General lien (for all debts).
- Conditions for exercising Lien: Possession of goods, debt due, no agreement to the contrary.
- Loss of Lien: Voluntary delivery of goods, waiver of lien, termination of bailment.
Understanding Stoppage in Transit
Stoppage in transit is a right available to the seller (or their agent) when the buyer becomes insolvent during the transit of goods. It allows the seller to regain possession of the goods while they are still in the hands of the carrier, preventing the buyer from receiving them and potentially dissipating assets.
- Conditions for exercising Stoppage in Transit: The buyer must be insolvent, the goods must be in transit (not delivered to the buyer), the seller must exercise the right while the goods are in transit, and notice must be given to the carrier.
- Effect of Stoppage: The buyer no longer has any rights over the goods. The seller can either resell the goods or retain them.
The Nexus: When Does Stoppage Begin Where Lien Ends?
The statement highlights a crucial connection. The right to lien typically exists *before* the goods are in transit. Once the goods are handed over to a carrier for the purpose of transmission to the buyer, the bailment relationship changes, and the bailee’s lien is generally extinguished. This is because the carrier now becomes the bailee, and the original bailee no longer has control over the goods.
It is at this precise moment – when the original bailee’s lien is lost due to the goods entering transit – that the seller’s right to stoppage in transit comes into play. The seller, upon learning of the buyer’s insolvency, can exercise their right to stop the goods while they are still in the carrier’s possession.
Illustrative Scenario
Consider a scenario where a manufacturer (seller) delivers goods to a warehouse (bailee) and retains a lien for storage charges. If the buyer becomes insolvent *before* the goods are dispatched to them, the manufacturer can exercise their lien. However, if the goods are dispatched and are in transit with a carrier, and *then* the buyer becomes insolvent, the manufacturer’s lien is lost, but they gain the right to stoppage in transit.
| Feature | Lien | Stoppage in Transit |
|---|---|---|
| Who exercises the right? | Bailee | Seller (or Agent) |
| When does it arise? | Before goods are in transit | During transit of goods |
| Triggering event | Debt due from the bailor | Buyer’s insolvency |
| Effect | Retention of possession | Regaining possession |
Conclusion
In conclusion, the statement “Right to stoppage of goods in transit starts when right to lien ends” accurately reflects the sequential nature of these two rights under the Sale of Goods Act, 1930. The loss of the bailee’s lien, triggered by the goods entering transit, creates the opportunity for the seller to exercise their right of stoppage, safeguarding their interests against the buyer’s insolvency. Understanding this interplay is crucial for effective commercial transactions and dispute resolution.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.