Business Law

Lien – Meaning, Characteristics And Types Of Lien

Lien – It means the right of one man to retain that which is in his possession belonging to another until some debt or claim of the person in possession are satisfied.

As is clear from the above definition, possession is essential for exercising the right of lien. It is therefore also called ‘possessory lien’. If the right to possession terminates, the lien also terminates. The right of lien arises by statute and not by contract. It implies that, under lien, the right is limited to the possession of some item or goods and does not extend to its sale, or making any change to such item or goods.

For example, the owner of a suit gives it to the dry cleaner for cleaning and the latter promises to return the same after two or three days. The dry cleaner cleans the suit and makes it ready for delivery, but he has the right to keep the suit till he is paid the charges, i.e., he has acquired the lien to the suit.

Characteristics Of Lien

  1. Possession is essential for exercising the right of lien. Without possession, there can be no lien.
  2. The right of lien arises from statute or law, not from a contract.
  3. The possession must be rightful, and not obtained by force, fraud or misrepresentation.
  4. The right of lien is a right to possess something, not to sell it.
  5. The person holding the right of lien is not the actual owner-he is somebody other than the owner.
  6. The right of lien is not transferable to a third person.
  7. The lien terminates when the bailee’s demands are met.
  8. When the possession terminates, the lien also terminates.

Kinds/Types of Lien

(1) Particular Lien: A particular lien is one which is available to the bailee only against those goods in respect of which he has rendered a service involving labour and skill in terms of time and effort. Section 170 explains ‘particular lien’ as under:

“When the bailee has, in accordance with the purpose of bailment, rendered any service involving the exercise of labour or skill in respect of the goods bailed, he has, in the absence of a contract to the contrary, a right to retain such goods until he receives due remuneration for the services he has rendered in respect of them.”

According to the provisions of law, the following persons are the holders of particular lien:

  • Finders of Goods-Section 168
  • Bailees- Section 170
  • Pawnees-Section 173
  • Agents Section 221
  • Unpaid Sellers-Section 71, Sale of Goods Act

(2) General Lien: A general lien implies the right to retain any item (which is in the possession of the holder) till the general balance of account of the holder is settled. In general lien, it is not essential that the demand is related to something which is in possession of the holder. It can be related to a past or a present liability of the person whose property is in lien. A general lien is a privilege which is available to selected categories of people by law. The Indian Contract Act specifies the following persons who are entitled by law to general lien as per Section 171:

  • Bankers
  • Factors
  • Wharfingers
  • Attorneys of High Courts
  • Insurance brokers
  • Others who give such rights by a written contact.

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