Q-What is a Contract of Sale? Differentiate between Sale and Agreement to Sell.
A.- Contract of Sale: According to Section 4 (1) A contract of sale of goods is a contract whereby the seller
transfers or agrees to transfer the property in goods to the buyer for a price, the contract is called Sale. In a
sale, immediate payment or delivery is not necessary. Payment and delivery may be do ne at a future date.
But the ownership of the goods, i.e. the property in the goods be transferred immediately from seller to the
buyer.
Essentials of a valid Contract of Sale:
• Property: Transfer of general property in the goods, i.e. transfer of ownership in goods and not special
property or special interest from seller to the buyer.
• Movable goods: Transfer of goods must be that of the movable goods only. • Price: The price or
consideration of goods must be in money.
• Parties: There must be two parties, i.e. seller and buyer. The parties must be competent to contract under
the Indian contract act of 1872. The seller and buyer must be two different persons.
• Forms: No particular form is necessary to constitute a contract of sale. A contract of sale may be made in
writing or by words of mouth, i.e. may be expressed or may be implied from the conduct of the parties or
from the course of dealing between the parties. It may also be made partly in writing or partly by words of
mouth. Proposal and acceptance must be made.
Agreement to sell: Where the transfer of property, i.e. ownership in the goods is to take place at a future
date or subject to some conditions to be fulfilled, the contract is called as Agreement to Sell. Where by the
contract of sale, the seller purports to affect the present sale of future goods, the agreement operates as an
Agreement to sell.
Distinguish between Sale & Agreement to Sell:
Sale Agreement to Sell
• Nature of Contract: Sale is an Executed
contract, i.e. one of the parties has already
performed his part of the contract.
Agreement to sell is an Executory contract. Bothe
the parties are yet to perform their mutual promises.
• Owner ship: Ownership passes immediately from
seller to the buyer.
Ownership passes to the buyer at a future date.
• Passing of Property: The property in the goods
passes to the buyer with the risk immediately.
The risk and property does not passes to the buyer
immediately
• Remedies for Breach of Contract The seller is
entitled to sue for the price of the goods and also
has a right of lien, stoppage in transit and resale.
The seller has the right only to sue for damages for
non-performance of the contract.
• Risk of Loss: In case of loss to goods in sale, the
loss will be borne by the buyer even if the
possession of the goods is with the seller.
While in an agreement to sell, the seller will have to
pay for the loss, since the ownership in the goods
has not passed to the buyer.
• Insolvency of Buyer: The seller must deliver the
goods to the official assignee or receiver and can
claim a rateable dividend for the price of the goods
Seller may refuse to deliver the goods unless paid
for.
• Insolvency of Seller The Buyer is entitled to receive
the goods from the official assignee or receiver.
The buyer has to prove the amount he has paid to
the seller and he can only claim a rateable divided
but he cannot compel the seller to sell and deliver
the goods.
