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Section 98: Sections 76 to 123 [Repealed by the Indian Sale of Goods Act, 1930]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 97 All 266 Sections of Indian Contract Act Section 99

Legal Commentary & Landmark Judgments: Section 98

Historical Section 98 of the Indian Contract Act, 1872 affirmed that the seller's possessory lien remained enforceable against the goods even if the buyer had resold or transferred them to a third-party purchaser, unless the original seller had expressly assented to the sub-sale. Transposed into Section 53 of the Sale of Goods Act, 1930, this principle establishes the priority of the original unpaid vendor over subsequent purchasers lacking possessory attornment.

  • Inefficacy of Unauthorized Sub-Sale on Vendor's Lien: A sub-sale executed by the original buyer did not divest the unpaid seller of his possessory lien; the sub-buyer acquired only the original buyer's equitable right to receive the goods upon satisfaction of the original purchase price.
  • Doctrine of Vendor Assent: The unpaid seller's lien was defeated only if the seller had expressly or impliedly assented to the sub-sale, thereby inducing the sub-purchaser to alter his position in reliance upon an unconditional release.
  • Distinction Between Mere Knowledge and Estoppel Assent: Mere knowledge by the seller of a pending sub-sale did not constitute statutory assent; there had to be positive conduct amounting to an attornment or waiver of possessory rights towards the sub-purchaser.
Key Landmark Precedents:
  • Dixon v. Yates (1833) 5 B & Ad 313: Authoritative precedent establishing that the resale of goods by a vendee who has not paid the price does not defeat the vendor's lien, unless the vendor has expressly consented to hold the goods as warehouseman or agent for the sub-vendee.
  • Murlidhar Chiranjilal v. Harishchandra Dwarkadas AIR 1962 SC 366: The Supreme Court examined sub-contracts in mercantile chains, affirming that an original vendor's contractual duties and possessory remedies are determined by the primary contract unless a tripartite novation or attornment is proved.
Courtroom Practice & Strategic Litigation Guidance:

When defending an unpaid seller against a sub-purchaser claiming possession, demand strict documentary proof of the seller's formal assent or attornment. Challenge mere purchase orders or invoices between the buyer and sub-buyer as res inter alios acta incapable of extinguishing the primary seller's statutory lien.

Section 97 All 266 Sections of Indian Contract Act Section 99