Sale and agreement to sell

Contract of Sale is governed by the The Sale of Goods Act, 1930. Section 4(1) defines the contract of the sale as –a contract whereby the seller transfers or agrees to transfer the property in goods to a buyer for a price. For a valid Contract of Sale, there must be certain essentials like:

There must be 2 distinct parties i.e. a buyer and a seller, to effect a contract of the sale and they must be competent to contract. The subject matter of a contract of sale must be goods. The buyer must pay some price for goods. The term ‘price’ is ‘the money consideration for a sale of goods’. Accordingly, consideration in a contract of sale has necessarily to be in money. Where goods are offered as consideration for goods, it will not amount to sale, but it will be called barter or exchange, which was prevalent in ancient times. All essential elements of a valid contract i.e. an offer, acceptance, consideration, capacity to contract and intention to create legal relations must also be present.

Thus a contract of sale consists of an agreement to sell and an actual sale. The terms Sale and Agreement to Sell are often used interchangeably, however in Law these are different from each other.

Sale in simple words means transfer of property for consideration. Here transfer of property means transfer of ownership and title of the goods.

For example Walter, a trader  agrees to sell Gus 500 kgs of corn at Rs. 10 per kg. Now this is a valid transfer, however if Walter agrees to transfer the same without charging Gus it shall not be a sale but a gift as there was no consideration. Such an event of sale is fixed, conditional and binding upon both the parties.

An agreement to sell can be defined as the transfer of property in goods that is to take place in future time or the transfer might take place depending on the fulfilment of certain conditions. An agreement to sell also becomes a sale when the given time elapses or the conditions that are needed for the transfer to happen gets fulfilled. An agreement to sell does not involve any transfer of the property in the goods.

How they are different?

  • In the contract of sale, the exchange of goods takes place immediately. In the agreement to sell the parties agree to exchange the goods for a price depending on the fulfilment of certain conditions at a future specified date.
  • Sale gives right in rem i.e., against the whole world whereas in agreement to sell it gives right in personam i.e., between the parties only.
  • The nature in the sale is absolute. The nature of the agreement to sell is conditional.
  • A contract of sale is an example of Executed Contract (past/present) whereas the Agreement to Sell is an example of Executory Contract (future).
  • Risk and rewards are transferred with the transfer of goods to the buyer in Sale. On the other hand, risk and rewards are not transferred as the goods are still in possession of the seller.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

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