ART. 1530.

Subject to the provisions of this Meaning of Insolvency

Title, when the buyer of goods is or
Buyers insolvency need not be judicially
becomes insolvent, the unpaid seller who
declared. An insolvent debtor forfeits his
has parted with the possession of the goods
rights to the period stipulated for payment
has the right of stopping them in transitu,
(Art. 1536)
that is to say, he may resume possession of
the goods at any time while they are in Paras: It is enough that the obligations
transit, and he will then become entitled to exceed a mans assets.
the same rights in regard to the goods as he
would have had if he had never parted with Who May Exercise
the possession.
-Any person who as between himself and
Right of seller to stop goods in transit purchaser, may be regarded as an unpaid
vendor.
If the unpaid seller has already parted with
the possession of the goods, he may still Requisites for the exercise of right of
exercise the second right of stoppage in stoppage in transitu.
transitu (Art. 1520[2].), that is, he may
1. The seller must be unpaid;
resume possession of the goods while
2. The buyer must be insolvent;
they are in transit, when the buyer is or
3. The goods must be in transit
becomes insolvent.
4. The seller must either actually take
The right is exercised either by: possession of the goods sold or
give notice of his claim to the
1. obtaining actual possession of the carrier or other person in possession
goods or 5. The seller must surrender the
2. by giving notice of his claim to the negotiable document of title, if
carrier or other bailee in possession. any, issued by the carrier or bailee
(Art. 1532.) 6. The seller must bear the
expenses of delivery of the goods
The unpaid seller exercising his right of
after the exercise of the right.
stoppage in transitu becomes entitled to the
same rights to the goods as if he had never Basis and nature of right of stoppage in
parted with the possession thereof. transitu.

Paras: It is available to the unpaid seller- The essential basis of the right of stoppage
in transitu is clearly the injustice of allowing
1. If he has parted with the possession
the buyer to acquire ownership and
of the goods
possession of the goods when he has not
2. If the buyer is or becomes insolvent
paid and, owing to his insolvency, cannot
NB: is or have been inserted to make it pay the price which was to be given in
clear that the sellers right exists even return for the goods. In other words, the
though the buyer was already insolvent at fundamental basis of the right is the far-
the time of sale. reaching principle allowing rescission
and restitution where there is actual or
prospective failure of consideration.
This right does not proceed from any whether they are in the possession of the
agreement of the parties but is carrier as such or as agent of the buyer.
independently conferred by law. It may
be regarded as a legal extension of the If part delivery of the goods has been made
unpaid sellers lien. to the buyer, or his agent in that behalf, the
remainder of the goods may be stopped in
ART. 1531. Goods are in transit within the transitu, unless such part delivery has been
meaning of the preceding article: under such circumstances as to show an
agreement with the buyer to give up
(1) From the time when they are delivered possession of the whole of the goods.
to a carrier by land, water, or air, or other
bailee for the purpose of transmission to the When goods considered no longer in
buyer, until the buyer, or his agent in that transit.
behalf, takes delivery of them from such
carrier or other bailee; The right of stoppage in transitu arises
solely when an unpaid seller has
(2) If the goods are rejected by the buyer, shipped goods to an insolvent buyer.
and the carrier or other bailee continues in The right to retake continues only while the
possession of them, even if the seller has goods are in transit.
refused to receive them back;
The goods are no longer in transit in the
Goods are no longer in transit within the following cases:
meaning of the preceding article:
(1) After delivery to the buyer or his
(1) If the buyer, or his agent in that behalf, agent in that behalf;
obtains delivery of the goods before their (2) If the buyer or his agent obtains
arrival at the appointed destination; possession of the goods at a point
before the destination originally
(2) If, after the arrival of the goods at the fixed;
appointed destination, the carrier or other (3) If the carrier or bailee
bailee acknowledges to the buyer or his acknowledges to hold the goods
agent that he holds the goods on his behalf on behalf of the buyer; and
and continues in possession of them as (4) If the carrier or bailee wrongfully
bailee for the buyer or his agent; and it is refuses to deliver the goods to the
immaterial that further destination for the buyer
goods may have been indicated by the
buyer; Attornment by the bailee

(3) If the carrier or other bailee wrongfully The right to stop the goods may be
refuses to deliver the goods to the buyer or terminated not simply by delivery to the
his agent in that behalf. buyer, but by attornment of the bailee to
the buyer.
If the goods are delivered to a ship, freight
train, truck, or airplane chartered by the At the time when a carrier first receives
buyer, it is a question depending on the goods consigned to the buyer, the carrier is
circumstances of the particular case, agent for the seller for the purpose of
carrying out the transit between the seller
and the buyer. In order to terminate the delivery to the principal, delivery to the
sellers right to stop, the carrier must enter buyers servant who is under a general
into a new relation, distinct from the original duty to obey his masters order, is
contract of carriage, to hold the goods for necessarily a delivery to the buyer.
the buyer as his agent not for the purpose of Hence, delivery to a vessel belonging
expediting them to the place of original to the buyer is delivery to the buyer.
destination, pursuant to that contract, but in
a new character for the purpose of custody Effect of partial delivery
on the buyers account. The mere fact that part of the goods has
Effect of refusal of carrier to attorn or been delivered does not deprive the seller
deliver the goods. of the right to stop with respect to the
remainder (par. 4.) just as the seller may
The carrier is not allowed to enlarge the still exercise his right of lien on the
sellers right by wrongfully refusing to deliver remainder after part of the goods had been
or attorn as the buyers agent. (Art. 1531, delivered. However, it may be shown that
par. 2[3].) But a rightful refusal by the the seller has an agreement with the buyer
carrier, based for instance, on the refusal of to give up possession of the whole of the
the buyer or his agent to pay the freight will goods.
not terminate the right to stop.
Paras:
Paras: If upon arrival the buyer
unjustifiably refuses to receive the goods, 1. Article refers to instances when goods
the goods are still in transitu and therefore, are still considered in transit and when no
the seller may still exercise the right of longer in transit
stoppage. 2. The right to get back the goods exists
Delivery to a ship, etc., chartered or only when goods are still in transitu
owned by buyer. 3. Taking of the property in transit by an
1) Chartered by the buyer. The mere unauthorized agent of the buyer does not
fact that the carrier is chartered by the extinguish the right of stoppage in transitu
buyer does not make a delivery to the
carrier a delivery to the buyer.

Whether delivery to a carrier chartered by

the buyer means possession by the carrier
as such or possession by the carrier as
agent of the buyer, in which case, the goods
are no longer in transit, is a question
depending on the circumstances of the
particular case.

2) Owned by the buyer. As delivery to

an agent, other than one whose only
duty is to forward the goods, is a