Short answer. An unpaid seller who still has a lien over the goods, or who stopped them in transit, may rescind the sale and resume ownership if the right to do so was reserved for default, or if the buyer has defaulted on payment for an unreasonable time — resuming ownership is what makes reselling possible.
What the law says
An unpaid seller having the right of lien or having stopped the goods in transitu, may rescind the transfer of title and resume the ownership in the goods, where he expressly reserved the right to do so in case the buyer should make default, or where the buyer has been in default in the payment of the price for an unreasonable time.
Civil Code, Article 1534 — Unpaid Seller's Right to Rescind. Read the full provision →
Getting the goods back before you can resell them
Reselling goods you already transferred to a non-paying buyer is not automatic; you first have to legally get the ownership back. This article gives an unpaid seller who still holds a lien over the goods, or who stopped them in transit, the power to rescind the transfer of title and resume the ownership in the goods. Once ownership has been resumed this way, the goods are legally yours again, which is what puts you in a position to resell them to someone else.
Two situations that trigger the right
The right to rescind and resume ownership does not exist in every unpaid-sale situation. It applies where the seller expressly reserved the right to rescind in case of buyer default — meaning the contract said so — or where the buyer "has been in default in the payment of the price for an unreasonable time" even without such a reservation. A single missed installment or a short delay is not automatically an unreasonable time; how long is unreasonable depends on the facts of the transaction.
Rescinding ends the contract claim, but not your right to damages
Once the seller rescinds under this article, the relationship changes. The seller shall not thereafter be liable to the buyer upon the contract of sale, but the seller may recover from the buyer damages for any loss occasioned by the breach of the contract. Rescinding does not mean walking away with nothing to show for the breach — it separates you from further contractual obligations to that buyer while preserving your ability to claim compensation for the loss their default caused.
Rescission has to be manifested, not just decided privately
The transfer of title is not treated as rescinded merely because the seller privately decided so. The seller must have "manifested by notice to the buyer or by some other overt act an intention to rescind." Notably, the law does not require that overt act to actually reach the buyer — but whether notice was given, or withheld, becomes relevant evidence if a dispute later arises over whether the buyer's default had really gone on for an unreasonable time before the seller acted.