An agreement to sell is a contract of sale of goods, in which the seller agrees to transfer goods to the buyer for a price at a later date or after the fulfilment of a condition. When there is a willingness of the both the parties to constitute a sale i.e. the buyer agrees to buy, and the seller is ready to sell the goods for monetary value. In an agreement to sell the performance of the contract is done at a future date, i.e. when the time elapses or when the necessary conditions are satisfied. After the contract is executed, it becomes a valid sale. All the necessary conditions required at the time of sale should exist in the case of an agreement to sell too. A contract of sale is a generic term and it includes both sale and agreement to sell. Where under a contract of sale, the property in the goods is transferred from the seller to the buyer, the contract is called Sale. But where the transfer of property in the goods is to be transferred at a future time or such transfer is contingent upon fulfilment of certain conditions thereof, the contract is referred to as Agreement to Sell. An agreement to sale becomes a sale when the time elapses or contingent condition thereto is fulfilled.
In case of an ‘Agreement to sell’[Section 8]- An agreement to sell becomes void if the following four conditions are satisfied: • There must be an agreement to sell specific goods. • The goods must have become perished or so damaged as no longer to answer their description in the agreement. • There must not be any fault of seller or buyer. • The risk must not have passed to the buyer, i.e. the goods must have perished before the agreement to sell becomes sale. Example 1-X agrees to sell a particular horse to Y on the expiry of 8 days. The horse was delivered on trial for 8 days. However, the horse died on the third day, without any fault of either the buyer or the seller. This agreement becomes void and X could not recover the price from Y. Example 2- X agreed to sell to Y 10 tonnes of potatoes to be grown on his land. X sowed sufficient land to grow more than 10 tonnes of potatoes. But without any fault on X’s part, a disease attacked the crop and only about 8 tonnes of potatoes could be grown. It was held that the agreement to sell has become void.
Key Differences Between Sale and Agreement to Sell
The following are the major differences between sale and agreement to sell:
- When the vendor sells goods to the customer for a price, and the transfer of goods from the vendor to the customer takes place at the same time, then it is known as Sale. When the seller agrees to sell the goods to the buyer at a future specified date or after the necessary conditions are fulfilled then it is known as Agreement to sell.
- The nature of sale is absolute while an agreement to sell is conditional.
- A contract of sale is an example of Executed Contract whereas the Agreement to Sell is an example of Executory Contract.
- 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.
- If the goods are lost or damaged subsequently, then in the case of sale it is the liability of the buyer, but if we talk about an agreement to sell, it is the liability of the seller.
- Tax is imposed at the time of sale, not at the time of agreement to sell.
- In the case of a sale, the right to sell the goods is in the hands of the buyer. Conversely, in agreement to sell, the seller has the right to sell the goods.
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