The unpaid seller can exercise his right of stoppage of goods in transit where the buyer
Under Section 46(1)(b) read with Section 50 of the Sale of Goods Act, 1930, subject to the provisions of the Act, when the buyer of goods becomes insolvent, the unpaid…
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The unpaid seller can exercise his right of stoppage of goods in transit where the buyer
Answer and explanation
Correct answer A
Under Section 46(1)(b) read with Section 50 of the Sale of Goods Act, 1930, subject to the provisions of the Act, when the buyer of goods becomes insolvent, the unpaid seller who has parted with the possession of the goods has the right of stopping them in transit—that is to say, he may resume possession of the goods as long as they are in the course of transit, and may retain them until payment or tender of the price. Under Section 2(8), a person is said to be 'insolvent' who has ceased to pay his debts in the ordinary course of business, or cannot pay his debts as they become due, whether he has committed an act of insolvency or not.
Option feedback
Option A
Correct: Under Sections 46(1)(b) and 50 of the Sale of Goods Act, 1930, an unpaid seller who has parted with the possession of the goods has the right of stopping them in transit only when the buyer of goods becomes insolvent.
Option B
Mere refusal to pay does not establish insolvency. Section 50 requires insolvency and applies where the unpaid seller has parted with goods still in transit.
Option C
Incorrect: Fraud by the buyer may render a contract voidable under Section 19 of the Indian Contract Act, 1872, but the statutory right of stoppage in transit under Section 50 of the Sale of Goods Act, 1930 specifically requires that the buyer becomes insolvent.
Option D
Refusal to pay and fraud alone do not establish the buyer's insolvency, which section 50 requires.
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