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Question

Difficulty: HardSale of Goods Act: Transfer of Title, Delivery, and Buyer/Seller Remedies

A textile manufacturer in Kano dispatches 200 rolls of fabric to a merchant in Lagos via an independent haulage company. While the delivery truck is en route, the manufacturer receives official notice that the merchant has declared bankruptcy and is insolvent. The manufacturer immediately orders the haulage company to halt transit and return the consignment to Kano. Which remedy under the Sale of Goods Act has the seller exercised, and what legal condition validates this action?

  1. Right of stoppage in transitu, validated because the buyer is insolvent and the goods are still in transit in the possession of an intermediary carrier.Answer
  2. B
    Right of lien, validated because an unpaid seller maintains constructive possession over goods whenever payment is withheld.
  3. C
    Action for the price of goods, validated because ownership automatically transfers to the buyer upon delivery to a common carrier.
  4. D
    Right of statutory repossession under hire purchase, validated because ownership remains with the seller until full settlement of the purchase price.

Answer

The correct answer is the right of stoppage in transitu, validated because the buyer is insolvent and the goods are still in transit in the possession of an intermediary carrier.
Under the Sale of Goods Act, an unpaid seller who has parted with possession of the goods has the right of stoppage in transitu. This right allows the seller to intercept the goods while they are in the hands of a carrier/carrier intermediary and regain possession if the buyer becomes insolvent before delivery is completed.

Step-by-Step Solution

1
Analyze the status of possession and transit in the scenario.
The seller has handed goods over to an independent carrier, so physical possession by the seller has ceased, but delivery to the buyer is incomplete.
Determines whether the unpaid seller can claim a right of lien or stoppage in transitu.
2
Evaluate the condition of the buyer.
The buyer has become insolvent (declared bankruptcy) while the goods are still in transit.
Insolvency of the buyer during transit is the statutory prerequisite for exercising stoppage in transitu under the Sale of Goods Act.
3
Identify the exact statutory remedy exercised by the seller.
Instructing the carrier to intercept delivery and hold or return the goods constitutes exercising the right of stoppage in transitu.
This real remedy allows the seller to regain possession of the goods from the carrier before final delivery to the insolvent buyer.

Key Concept

Unpaid Seller's Real Remedies: Stoppage in Transitu vs. Right of Lien
Estimated Time:2m 0s
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Topics

Sale of Goods Act: Transfer of Title, Delivery, and Buyer/Seller Remedies

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