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Section 104: Sections 76 to 123 [Repealed by the Indian Sale of Goods Act, 1930]

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1872
Section 103 All 266 Sections of Indian Contract Act Section 105

Legal Commentary & Landmark Judgments: Section 104

Historical Section 104 of the Indian Contract Act, 1872 clarified the legal effect of a successful stoppage in transit on the contractual relationship, declaring that stoppage does not rescind the contract of sale but restores the seller to his pre-delivery position, revesting the unpaid seller's possessory lien. Now codified in Section 54 of the Sale of Goods Act, 1930, this provision reinforces that stoppage is an enforcement of possessory security, not an automatic repudiation.

  • Non-Rescission of Underlying Sale: Stoppage in transit does not annul or terminate the contract; title remains in the buyer subject to the seller's revived possessory lien.
  • Right to Withhold Until Full Payment: The seller holds the goods until the contract price, demurrage, and transit expenses incurred are discharged by the buyer or his liquidator.
  • Reversion of Resale Powers: Once the seller resumes lawful possession under stoppage, he becomes vested with all statutory powers of resale applicable to an unpaid seller in possession.
Key Landmark Precedents:
  • Schotsmans v. Lancashire & Yorkshire Railway Co. (1867) LR 2 Ch App 332: Foundational authority explaining that stoppage in transitu does not rescind the sale; it merely restores the vendor's lien, enabling him to hold the goods as security until paid.
  • Babu Ram v. Ramji Lal AIR 1964 SC 1230: The Supreme Court observed that the statutory rights of an unpaid seller under sales legislation are cumulative and possessory in nature, preserving underlying contractual claims for damages upon buyer's failure to discharge the purchase price.
Courtroom Practice & Strategic Litigation Guidance:

After stopping goods in transitu, avoid treating the contract as immediately dead without issuing formal notice to pay. Issue a comprehensive notice of demand requiring payment within a reasonable cure period, failing which the seller will proceed to resell the goods and sue for any deficiency under Section 54.

Section 103 All 266 Sections of Indian Contract Act Section 105