Where the buyer under Kenya law defaults in his principle obligation then the seller can claim her/his damages. When
parties go to court it can take a long time to sort out court
litigation and there are cases that have been pending for the last 6
years. It is therefore important for the seller to consider the best option in enforcing his remedies. There are two remedies for the seller
1. Real Remedy
2. Personal Remedy
Real remedy under Kenya law is that right which the seller has by virtue of being in possession of the goods. He holds the goods as security until the price is paid. Real
remedy is only available where the seller has possession where property
has passed and he has not delivered the goods to the buyer or he has
repossessed the goods. This real remedy is based purely on
possession of goods by the seller and as soon as the seller has
released possession, the remedy passes. One must be in possession of the goods.
The second remedy has to do with where the seller must be an unpaid seller. The seller is unpaid where he or she has not received the total price. A
seller is unpaid if he/she has not received total price or the total
price has not been tendered to him/her no matter how small the balance
is. The seller is also unpaid when the bill of exchange or negotiable instrument has been dishonoured. Note that the seller includes the seller’s agent.
There is another remedy – the lien.
Lien under Kenya law is the right to retain goods until the whole of price has been either paid or tendered. Note
that the seller’s lien does not give the seller any property in the
goods but the lien allows the unpaid seller the right to resell the
goods subject to certain conditions
1. Seller must be unpaid seller
2. No right to lien if goods are sold on credit and the time for the credit has not expired;
3. The
unpaid seller must be in possession of the goods; if for any reason the
unpaid seller loses possession of the goods then both real remedy and
lien remedy are lost. The two remedies are based on the seller being in possession.
Anytime
between delivery of goods to an agent/carrier for onward transmission
to the buyer, the unpaid seller has a right to stop the sale of goods,
Stoppage in transit. Stoppage in transit applies when
the buyer becomes insolvent in which case the seller may resume
possession of the goods and he may retain the same until he/she is paid
the same price.
Conditions for stoppage in transit under Kenya law
1. The seller must be unpaid,
2. Buyer must be insolvent
3. The goods must be in transit
Vendor v. Carrier
There
is a carrier who is obviously an agent of the seller, if for instance
the sale of goods contract says that the seller shall deliver the goods
to the buyer and the seller loads the goods to vehicle to deliver to the
buyer then the goods are still in the seller’s possession. Where
the carrier is the agent of the buyer, then immediately the goods are
delivered to that carrier, the seller has delivered the goods to the
buyer and the stoppage in transit is only applicable where the goods
have not reached the buyer. If you can determine that the
carrier is the buyer’s agent, the goods have been delivered to the buyer
as soon as they are loaded.
Where
you have an independent contractor it is your duty to determine whose
agent the independent contractor at the time you want to ascertain
possession of the goods. Even with the independent
contractor, the person who gives the initial instructions is by and
large the principal, master and employer.
When
you talk of vendor and carrier therefore if the seller gives orders to
the carrier and that carrier happens to be the seller’s agent to stop
delivery to the buyer and the carrier disobeys the instructions, if the
carrier delivers the goods to the buyer he commits conversion. Where
the carrier is a common carrier e.g. Malindi bus where you have loaded
omena and the bus has left carrying the fish. Somewhere along Mtito you
get information that the buyer has been declared bankrupt, who has
possession of these goods?
Once
the seller has possession either initially or through stoppage in
transit, he has a right to resell or hold on the goods and force the
buyer to pay, if the buyer cannot afford to pay, the seller can sell the
goods if he still has possession and pass a good title to the second
buyer. But supposing the unpaid seller after resale makes a profit? Who is entitled to the profit? The profit goes to the unpaid seller not the buyer. It
is inequitable that an unpaid seller who is selling the goods because
the buyer has defaulted that the seller is entitled to get whatever is
over and above. The buyer who has acquired property in the
goods without payment and now would want to make a profit of the goods
that he has inconvenienced the seller by not paying should not benefit
from the subsequent sale of the goods. Even when the seller sells the goods to reclaim his money, he can still sue the buyer for damages.