Remedies of the Seller: Understanding Rights Against a Defaulting Buyer
Continuing from our previous discussion on buyer’s remedies, it is only natural to examine the other side of the transaction: what happens when the buyer fails to perform under a sale of goods contract? While buyers have strong protections after acceptance, sellers are not left powerless. The law provides them with a structured set of remedies to ensure they are not unfairly disadvantaged by a buyer’s non-performance.
In this chapter, we explore the remedies available to sellers under the Sale of Goods Act 1979 (SGA), with examples reflecting the realities of business in 2025. We will consider both personal remedies (actions against the buyer directly) and real remedies (rights related to the goods themselves), explaining how each works in practice.
1. Action for the Price: Securing Payment
The most straightforward personal remedy available to a seller is an action for the price. This is an action in debt, allowing the seller to claim the contract price directly from the buyer when:
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Property has passed to the buyer, and the buyer wrongfully fails to pay according to the terms of the contract.
Example 2025: Imagine a UK software company sells a custom industrial 3D printer to a European distributor. The property passes when the printer is delivered and installed. If the distributor refuses payment after installation, the seller can sue for the full contract price.
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The contract fixes a payment date regardless of delivery, and the buyer defaults.
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Risk has passed to the buyer even if property has not formally passed.
Advantages of this action over claiming damages:
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Certainty: The seller knows exactly how much they are owed.
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No need to prove causation, remoteness, or mitigation of loss.
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Predictability: Remoteness rules only apply to damages, not price claims.
Additional measures: The seller can also claim damages for losses reasonably foreseeable due to the buyer’s breach (s.54) or seek compensation for care and custody of goods under s.37(1).
Example 2025: A UK furniture manufacturer sells a batch of modular office desks to a startup in Berlin. The startup delays collection and refuses payment. Even if the desks have not left the warehouse, the seller can claim the agreed price plus storage costs as damages.
2. Action for Damages: Compensating Non-Acceptance
Where the buyer wrongfully refuses to accept or pay for the goods, the seller can bring an action for damages under s.50. This is particularly relevant when:
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The property has not passed (the buyer cannot yet be sued for the price).
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The property has passed, providing an alternative to claiming the price.
Key Principles:
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Damages cover loss directly and naturally resulting from the breach.
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The seller must mitigate their losses (e.g., by reselling the goods).
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Where a market exists, damages are usually calculated as contract price – market price at the time of expected acceptance.
Example : A seller delivers high-end electric bicycles to a large rental company in Paris. The buyer refuses to accept them. The market price for those specific models has dropped by 5% due to a new competitor. The seller can claim the 5% difference as damages, assuming they attempted to resell the bikes promptly.
Special Note: If the buyer has paid partially, damages are deducted from prior payments, unless the contract specifies that such payments are non-refundable earnest money.
3. Rights of the Unpaid Seller: Lien, Stoppage, and Resale
3.1 Unpaid Seller’s Lien
A lien allows the seller to retain possession of goods until payment, even if ownership has passed. This right provides a defense against claims by the buyer for non-delivery.
Conditions for lien:
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Seller must be in possession of the goods.
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Goods are either:
Example: A tech company sells high-performance laptops to a co-working space. The laptops are delivered to the office but the co-working space is insolvent and fails to pay. The seller can retain the laptops until payment or resell them under lien rights.
Limitations: The lien is lost if:
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Full payment is made.
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Goods are lawfully delivered to a carrier without reserving disposal rights.
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Buyer lawfully takes possession.
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The seller waives the lien (explicitly or implicitly).
3.2 Right of Stoppage in Transit
If the buyer becomes insolvent while goods are still in transit, the unpaid seller can stop the goods before delivery by either reclaiming them or notifying the carrier.
Conditions:
Example : A UK organic food supplier ships premium olive oil to a restaurant chain in Madrid. Mid-transit, the chain declares bankruptcy. The supplier can notify the shipping company to stop the shipment, avoiding a loss.
Transit ends if:
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Buyer or agent receives the goods.
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Carrier acknowledges holding for the buyer.
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Document of title has been lawfully transferred to a new buyer.
3.3 Rescission and Resale
Exercising a lien or stoppage does not automatically cancel the contract. Property only reverts to the seller if:
Rights of resale arise:
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Seller reserves the right in case of default.
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Seller has exercised lien or stoppage and resells.
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Goods are perishable or the buyer fails to pay after notice.
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Buyer repudiates the contract.
Example : A UK electronics manufacturer ships limited-edition gaming consoles to a retailer. The retailer refuses payment and rejects delivery. The manufacturer resells the consoles to another retailer. The new buyer obtains a good title, and the original retailer remains liable for losses.
4. Waiver: Voluntary Limitation of Rights
A seller may waive certain remedies temporarily or permanently. For instance, they may:
Important: Waiver is irrevocable if the buyer has relied on it and changed position. Otherwise, the seller can revive their rights by giving notice.
Example : A supplier allows a small business to postpone payment for a new coffee machine due to temporary cash flow issues. If the supplier later notifies the business of default, the right to claim payment or stop goods can be reinstated, provided the business has not acted to their detriment.
5. Conclusion: Balancing Protection and Commercial Certainty
Just as acceptance marks a turning point for buyers, non-payment or non-acceptance triggers a complex set of remedies for sellers. These remedies are designed to:
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Protect the seller from financial loss.
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Ensure continuity in commercial relationships.
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Balance fairness and efficiency without giving either party undue power.
By understanding actions for the price, damages, lien, stoppage, resale, and waiver, businesses in 2025 can navigate the realities of modern commerce—whether shipping tech hardware, perishable goods, or bespoke services—while maintaining legal protection against buyer defaults.
Ultimately, remedies of the seller and remedies of the buyer are two sides of the same coin: the law aims to provide a fair and predictable framework where both parties can confidently engage in transactions, knowing that their rights are enforceable even when things go wrong.
Which of the following is the primary personal remedy available to a seller when a buyer wrongfully fails to pay after property has passed?
Action for the price, claiming the contract amount directly from the buyer.
Right to repossess goods after resale.
Claim for waiver of future payments.
Under what conditions can an unpaid seller exercise a lien over goods?
Seller is in possession, goods sold without credit or buyer is insolvent.
Buyer has partially paid and accepted the goods.
Goods are already delivered and in use by the buyer.
If a buyer becomes insolvent while goods are in transit, what right allows the seller to stop delivery?
Right of stoppage in transit.
Claim for damages due to minor defects.
A seller allows a buyer to delay payment for a custom coffee machine. Later, the buyer fails to pay. When can the seller revive their rights?
By giving reasonable notice, provided the buyer has not relied detrimentally on the waiver.
Immediately after the original contract date.
Only if the buyer has accepted the goods already.
