DIFFERENCE BETWEEN SALE AND AGREEMENT TO SELL | DEFINITION & MEANING

DIFFERENCE BETWEEN SALE AND AGREEMENT TO SELL | DEFINITION & MEANING

March 6, 2018 Off By Free Online Notes

What is Difference Between Sale and Agreement to sell? Sale and agreement to sell both are the part of a contract of sale  they have been distinguished under section 4(3} Of sale Of goods Act  follows:
“Where under the contract of sale, the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future  time or subject to some condition thereafter to be fulfilled, the contract  called an agreement to sell”.
So we find that in case of a sale, the goods which form the subject matter of the contract of sale is delivered to the buyer at the time of the contract. But in case of an agreement to sell, the goods which form the subject matter of the contract remain the property of the seller and he can dispose of them off as he likes, till the contract is completed by passing the property, to the buyer at some future time.
Illustrations
(a)        A sells his bicycle to B for Rs. 1500. He gets Rs. 1500 and hands over the bicycle to B. It is a sale.
(b)       A Agrees to sell 1000 units of his product” for Rs. 10 each. It is further decided that B will pay Rs. 10000 after 10 days and A  then deliver goods to B. It is an agreement to sell. Let’s discuss in detail Difference Between Sale and Agreement to sell.

DIFFERENCE BETWEEN SALE AND AGREEMENT TO SELL

The following are the most important points of distinction between sale and agreement to sell.

 1.TRANSFER OF PROPERTY
In case of sale the property in goods is transferred by the seller to the buyer at the same time. But in case of agreement to sell, the property in goods is delivered to the buyer at some future time or subject to fulfillment of any condition.
2. PURE CONTRACT
An agreement to sell is a contract pure and simple and gives rights both the parties against each Other for any default in fulfilling any part of agreement. But sale is contract plus conveyance, and gives right to the buyer to enjoy goods.
3. OWNERSHIP RIGHTS
In case of sale, the goods are actual transferred from the seller to the buyer and become the property of the buyer. So ownership rights are transferred from the seller to the buyer. But in case of an agreement to   sell goods remain the property of the seller and ownership rights remains with seller.
4. ACCIDENTAL LOSSES
In case of sale, if goods are destroyed by an accident, as a rule, the loss falls on buyer. But in case of agreement to sell, such accidental loss falls on seller because the goods are till now the property of the seller.

5. SPECIFIED GOODS

In case of sale the goods for which contract is made identified and agreed upon at the time when the contract of sale But in an agreement to sell the goods may be specified or future goods.
6. NATURE OF CONTRACT          
In case of sale, the contract is executed performed. But in case of agreement to sell, it is an executory contract because till now it is to be performed.
7. BUYER’S DEFAULT
In a sale, if the buyer fails to pay for the goods, the seller can sue for the price of goods only. But in case of agreement to sell if the buyer fails to pay or accept the goods, the seller can sue only for damages because goods are still with the seller.
8. SELLER’S DEFAULT
In case of agreement to sell if the seller is defaulter, the buyer can claim only for damages because goods are still the property of the seller. But in case of sale the buyer has not only his personal remedy against the seller but the goods are also in the possession of the buyer.
9. BUYER’S INSOLVENCY
In case of an agreement to sell, if buyer is declared as an insolvent and still he has not paid for the price, the seller can refuse to deliver the goods. In a sale, the seller can use his right of lien or stoppage in transit as unpaid seller, In the absence of such rights he can claim for retable dividend.
10. SELLER’S INSOLVENCY
In an agreement to sell, if the seller is Declared as an insolvent and has received the price of the goods, the buyer can claim only for dividend. But in case of sale the goods will be in the hands of the buyer and he will have no risk.

AN AGREEMENT TO SELL WHEN BECOMES SALE

When under the contract of sale, the property in goods transferred from the seller to the buyer, the contract is called a safe.  when the seller transfers to the buyer the possession of the such goods for which parties have entered into an agreement to sell, then agreement to sell will become sale and the seller will have no right on goods but he can claim only for the payment of price.