The right of lien and the right of stoppage-in-transit are both legal rights available to a seller or creditor in relation to goods, but they operate in different circumstances and have distinct implications. Here's a distinction between the two:
1. Right of Lien:
Definition: The right of lien refers to the seller's right to retain possession of goods until certain obligations, such as payment of the purchase price, are fulfilled by the buyer.
Nature: Lien is a possessory right, meaning it allows the seller to retain physical control over the goods until the buyer meets the specified conditions.
Timing: Lien can be exercised at any time while the seller remains in possession of the goods, even after the goods have been delivered to the buyer.
Purpose: The purpose of lien is to provide security to the seller for the performance of the buyer's obligations, such as payment for the goods or services provided.
Effect: If the buyer fails to fulfill their obligations, the seller may retain possession of the goods or sell them to recover the outstanding amount owed.
2. Right of Stoppage-in-Transit:
Definition: The right of stoppage-in-transit refers to the seller's right to regain possession of goods while they are in transit to the buyer if the buyer becomes insolvent or otherwise unable to fulfill their obligations.
Nature: Stoppage-in-transit is a right that arises during the transportation of goods from the seller to the buyer. It allows the seller to intercept the goods before they reach the buyer.
Timing: Stoppage-in-transit can only be exercised while the goods are in transit and before they come into the physical possession of the buyer.
Purpose: The purpose of stoppage-in-transit is to enable the seller to reclaim possession of the goods in case of the buyer's insolvency, thereby protecting the seller's interests.
Effect: If the seller validly exercises the right of stoppage-in-transit, they can demand the return of the goods from the carrier or intermediary, preventing the buyer from taking possession and enabling the seller to deal with the goods as they see fit.
In summary, while both the right of lien and the right of stoppage-in-transit serve to protect the interests of the seller in relation to goods, they differ in terms of when they can be exercised, their nature, and their purpose. Lien operates while the seller retains possession of the goods, providing security for the seller's claims, while stoppage-in-transit allows the seller to intercept the goods during transit to protect against the buyer's insolvency.
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