Table of Contents
Sale and Agreement to Sell:
There is little difference between a Sale and an agreement to sell.
The sale is a transaction in which one person transfers his ownership concerning certain goods and thereafter simultaneously delivers the goods to another person, in response to which the person to whom the goods are transferred, pays consideration to the owner of the goods.
Agreement to sell is a transaction wherein both parties perform their parts and agree to fulfill their remaining liabilities in the agreed future time. Or the parties to an agreement to sell agree to perform their whole part on the same future day.
There are two persons in a contract of sale;
Seller:
A person who sells his goods.
Buyer:
A person to whom the goods are sold (or)
A person who purchases the goods.
Relevant Provisions:
Section 4 and 5 of the Sale of Goods Act,1930.
Meaning of Sale:
The sale means “an act or process of selling something” is called Sale.
According to the Merriam-Webster Dictionary;
“Transfer of property or title for price“.
Definition of Sale:
According to Section 4(1) of the Sale of Goods Act, 1930:
“Sale is an agreement whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price”.
Prof. Wilston:
“Sale is an agreement whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price”.
Essentials of Sale:
There are certain essential elements of the sale.
- Bilateral
- Free consent
- Transfer of Property
- Price(money) or consideration
- Goods
1). Bilateral:
In the transaction of sale, the contract shall be bilateral.
2). Free Consent:
There must be free consent i.e. the willingness of both parties.
3). Transfer of Property:
To constitute a valid contract of sale it is essential that the transfer of property takes place on the spot.
4). Price (money) or Consideration:
In the transaction of sale, there shall be an agreed consideration that has to be paid by the buyer to the seller on the spot.
5). Goods:
According to Section 2(7) of the Sale of Goods Act,1930, “goods means every kind of movable property other than actionable claims and money; and includes electricity, water, gas, stock, and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be served before the sale or under the contract of sale.
In the contract of sale, there shall be property in the shape of goods that’s movable property.
Agreement to Sell:
Agreement to sell is a transaction wherein both parties perform their parts and agree to fulfil their remaining liabilities in the agreed future time. Or the parties to an agreement to sell agree to perform their whole part on the same future day.
According to Section 4(4) of the Sale of Goods Act,1930:
Agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.
Difference between Sale and Agreement to sell:
1). Nature of Contract:
A Sale is an executed contract with no provision left to be performed. While the agreement to sell is an executory contract in which ownership rights have not been transferred yet.
2). Risk of Loss:
In case of a sale if the goods are destroyed the loss falls on the buyer even if he does not have actual possession of the goods.
While in agreement to sell the loss is suffered by the seller since the goods have not yet been sold; even if at the time of loss, they are in the possession of the buyer.
3). Delivery of Goods:
The goods are delivered on the spot in the Sale. While in agreement to sell, the goods have to be delivered in the future agreed time.
4). Ownership:
In the Sale, Ownership is transferred on the spot to the buyer. While in agreement to sell, Ownership is transferred later in the future.
5). Insolvency of seller:
In a Sale, If a seller is adjudicated insolvent, the buyer is entitled to recover his goods from the official receiver or he can recover the price. Whereas In an agreement to sell, the buyer cannot get the price of the goods but he can only sue for damages.
6). Breach of contract:
The buyer can file a suit for specific performance if the seller refuses to perform his part in the sale. Whereas in the agreement to sell, If the seller breaches the contract of sale, the buyer can only claim damages.
7). Right of Resale:
In a sale the seller cannot resell the goods; if he does he can be sued for damages. While In agreement to sell if the seller resells, he can only be sued for breach of contract.
8). Title:
In the sale, the title deeds are handed over on the spot. Whereas In agreement to sell the title deeds are handed over in the future.
To conclude the business transactions that take place between buyers and sellers are governed by the Sale of Goods Act 1930, which was initially part of the Contract Act but was later repealed and transformed into a separate law governed by a contract of sale. Section 4 of the Sale of Goods Act 1930 deals with the concept of “Sale” and “agreement to sell”.