Difference between Sale and Agreement to Sell
Basis of Difference |
Sale |
Agreement to Sell |
---|---|---|
Transfer of Goods | The goods are transferred to buyer immediately. | The goods are transferred to the buyer at a future date or when the conditions are fulfilled. |
Nature of Contract | Sale is an executed contract; i.e., it is a type of contract for which consideration has already been paid. | Agreement to sell is an executory contract, as here the consideration will be paid at a future date. |
Status of Contract | It is a completed contract. | It is an ongoing contract. |
Available Remedy on Breach of Contract | The seller has the remedy to sue the buyer for the price of the goods as the goods have been transferred to the buyer. | The aggrieved party in this case can sue for damages only, as the price is to be paid on some future date. |
Liability of the Party | Any subsequent damage or destruction is the liability of the buyer as the property has been transferred and the contract has been executed. | Any loss or damage shall be the responsibility of the seller and any damage or destruction does not mean discharge of the contract. |
Risk | The risk of loss is on the buyer as risk follows ownership. | Any risk of loss is of the seller. |
Nature of Right | Sale creates Jus in rem, which means right against the whole world. | Agreement to sell creates Jus in personam means rights against a particular party to the contract. |
Right to Sale | The seller can’t resale goods. | The seller can resale the goods as the seller is in the possession of goods. |
Insolvency of Seller | The official assignee can only recover the price from the buyer. | The official assignee can recover the goods but not the price. |
Insolvency of Buyer | The official assignee will gain control of the goods. | The official assignee cannot gain control over the goods |
Difference between Sale and Agreement to Sell
The sale of commodities is one of the most important types of contract under Indian laws. Sale transfers ownership of goods immediately, whereas an Agreement to Sell only promises to transfer ownership at a future date or upon certain conditions. The Sale of Goods Act, 1930 has been codified and made as a separate enactment to contain the provisions relating to the Sale of Goods, as this was earlier contained under Sections 76 to 123 of the Indian Contract Act, 1872. This act was passed because the provisions of the Contract Act were found to be inadequate to deal with new situations that were arising due to an increase in mercantile situations.
As per Section 2 of the Sale of Goods Act, 1930, “a Contract of Sale is a term that includes both Sale and Agreement to Sell and is characterized by an offer to buy goods for a price or an offer to sell goods for a price, and acceptance of the offer.”
Table of Content
- What is Sale?
- What is an Agreement to Sell?
- Difference between Sale and Agreement to Sell
- Conclusion
- Frequently Asked Questions (FAQs)
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