What remedies are available to the seller if the buyer refuses to pay for the goods?

The Sale of Goods Ordinance (“SOGO”)  sets out the following remedies for the seller:

• claim price of the goods;
• damages for non-acceptance;
• right to lien;
• withhold delivery;
• the right to resale

1. Action for the price (section 51, SOGO)

If the buyer wrongfully neglects/refuses to pay the price for the goods and the property in the goods has been passed to the buyer, the seller may maintain an action against the buyer for the price of the goods.

However, if the price of the goods is payable on a certain date irrespective of delivery, the seller can also claim for the price of goods if the buyer fails to pay such price. In that case, it is irrelevant if the property in the Goods has not passed, and the goods have not been appropriated to the contract. .

2. Damages for non-acceptance (section 52, SOGO)

A seller can also claim damages for loss arising due to the buyer’s wrongful failure to accept and pay for the goods. The measure of damages is the estimated loss directly and naturally resulting from the buyer’s breach of contract.

Where there is an available market for the goods in question, the measure of damages is generally to be determined by the difference between the contract price and the market or current price at the time(s) when the goods ought to have been accepted; if no time was fixed for acceptance, then at the time of the neglect or refusal to accept.

3. Right to a lien

As per sections 41 and 43 of SOGO, an unpaid seller has a lien over the goods or a right to retain possession of the goods until the price is paid.

4. Right to withhold delivery

In addition to other remedies, an unpaid seller can withhold delivery of the goods when property in the goods has not yet passed to the buyer.

When a buyer is insolvent, the unpaid seller, even though he/she no longer has possession of the goods, has the right to stop the goods in transit and to retain possession until paid.

5. Right of resale

Under section 41 of SOGO, an unpaid seller has a right to resell the goods. The right of resale is the right that the seller in a sale of goods contract has to resell the goods if the buyer does not pay the price as agreed.

If the goods are of perishable nature or the seller informs the buyer that the goods will be resold and the buyer still does not pay within a reasonable time, the seller may resell them and recover from the first buyer damages for any loss.

Key Takeaways

• In case of non-payment of goods, seller can claim price of the goods, damages for non-acceptance, right to lien, withhold delivery or the right to resale

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