Distinguish between Sale and Agreement to Sale

Distinguish between Sale and Agreement to Sale

When in a contract of sale, the exchange of goods for money consideration takes place immediately, it is known as Sale. Example: ‘X’ sold 10 laptops to ‘Y’ against payment of $ 3,000.

If there is an intention to sell the goods at a certain time in the future or some conditions are satisfied, it is called an Agreement to sell. Example: ‘X’ agrees to sell 10 laptops to ‘Y’ for $ 3,000 after getting the stock.

Difference between Sale and Agreement to Sale –

(a) Transfer of Ownership

In an agreement to sell, the property in the goods remains with the seller until the agreement to sell becomes a sale by the expiry of the agreed time or the fulfillment of the agreed conditions. Till this happens the goods can be resold by the seller or attached in execution of a decree against him. In case of a sale, the property passes to the buyer and the goods cannot be seized in execution of a decree against the seller.

(b) Transfer of Risk

Where the transaction amounts to a sale, the goods belong to the buyer and he has to bear the loss if the goods are subsequently damaged or destroyed.

(c) Remedial Measures

In the case of a sale, the unpaid seller has certain reliefs available, e.g., lien, stoppage in transit, resale etc. In case of an agreement to sell, the seller’s remedy for breach of contract by the buyers is a suit for damages.

(d) Nature of Contract

‘Sale’ is an ‘executed contract’ because, in a sale, consideration moves simultaneously with the promises of both parties. Also, in a sale, the property of specific goods is transferred to the buyer immediately. But an ‘agreement to sell’ is an ‘executory contract’ because the consideration is to move at a future date. Also, the property of specific goods passes to the buyer later.

The person who buys the goods upon such resale gets a good title even if the seller has failed to give notice to the first buyer. But if no notice is given and the goods are sold, the seller cannot sue the first buyer for damages for breach of contract and must pay back to the first buyer any, a profit which he has realized from the resale (i.e. the amount received in excess of the original price).

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