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Key Differences

Know the Differences & Comparisons

Difference Between Sale and Agreement to sell

saleA ‘Contract of Sale‘ is a type of contract whereby one party (seller) either transfers the ownership of goods or agrees to transfer it for money to the other party (buyer). A contract of sale can be a sale or an agreement to sell. In a contract of sale, when there is an actual sale of goods, it is known as Sale whereas if there is an intention to sell the goods at a certain time in future or some conditions are satisfied, it is called an Agreement to sell.

Both sale and agreement to sell are types of contract, wherein the former is an executed contract whereas the latter represents an executory contract. Many law students get confused amidst these two terms, but these are not one and the same. Here, in the article given below, we’ve explained the difference between sale and agreement to sell, check it out.

Content: Sale Vs Agreement to sell

  1. Comparison Chart
  2. Definition
  3. Key Differences
  4. Video
  5. Conclusion

Comparison Chart

Basis for ComparisonSaleAgreement to sell
MeaningWhen in a contract of sale, the exchange of goods for money consideration takes place immediately, it is known as Sale.When in a contract of sale the parties to contract agree to exchange the goods for a price at a future specified date is known as an Agreement to Sell.
NatureAbsoluteConditional
Type of ContractExecuted ContractExecutory Contract
Transfer of riskYesNo
TitleIn sale, the title of goods transfers to the buyer with the transfer of goods.In an agreement to sell, the title of goods remains with the seller as there is no transfer of goods.
Right to sellBuyerSeller
Consequences of subsequent loss or damage to the goodsResponsibility of buyerResponsibility of seller
TaxVAT is charged at the time of sale.No tax is levied.
Suit for breach of contract by the sellerThe buyer can claim damages from the seller and proprietary remedy from the party to whom the goods are sold.Here the buyer has the right to claim damages only.
Right of unpaid sellerRight to sue for the price.Right to sue for damages.

Definition of Sale

A sale is a type of contract in which the seller transfers the ownership of goods to the buyer for a money consideration. Here the relationship amidst the seller and buyer is of creditor and debtor. It is the result of an agreement to sell when the conditions are fulfilled and the specified time is over.

Types of Sale

Types of Sale

The following are the essential conditions regarding Sale:

  1. There must be at least two parties; one is the buyer, and other is the seller.
  2. The subject matter of the sale is the goods.
  3. Payment should be made in the country’s legal currency.
  4. The goods should pass from seller to buyer.
  5. All the necessary conditions of a valid contract should be present like free consent, consideration, a lawful object, capacity of parties, etc.

If the goods are being sold and the property is transferred to the buyer, but the seller is not paid. Then, the seller can go to the court and file a suit against the buyer for the damages and the price too. On the other hand, if the goods are not delivered to the buyer then he can also sue the seller for damages.

Definition of Agreement to Sell

An agreement to sell is also 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.

If the seller rescinds the contract, then the buyer can claim damages for the breach of contract. On the other hand, the unpaid seller can also sue the buyer for damages.

Key Differences Between Sale and Agreement to Sell

The following are the major differences between sale and agreement to sell:

  1. 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.
  2. The nature of sale is absolute while an agreement to sell is conditional.
  3. A contract of sale is an example of Executed Contract whereas the Agreement to Sell is an example of Executory Contract.
  4. 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.
  5. 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.
  6. Tax is imposed at the time of sale, not at the time of agreement to sell.
  7. 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.

Video: Sale Vs Agreement to Sell

Conclusion

Under Indian Sale of Goods Act 1930, section 4 (3) deals with the contract of sale and agreement to sell, where it has been clarified that the agreement to sell also come under sale. However, there is a distinction between these two terms which we discussed above.

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Comments

  1. tarzan says

    March 16, 2017 at 9:47 am

    thank you very much it is precise to the point keep the good work & get tons of blessings if you should also have difference between CONDITIONAL SALE & ABSOLUTE SALE WITH MERITS & DEMERITS thanks once again

    Reply
    • Surbhi S says

      March 16, 2017 at 10:19 am

      Your views and suggestions are valuable to us. Thanks for the blessings and appreciation.

      Reply
  2. Ayush Rikhari says

    May 28, 2017 at 9:03 am

    Thank you very much for this answer as very easy language and understand it easily

    Reply
  3. Muhammad Khurram says

    November 21, 2017 at 2:43 pm

    very informative

    Reply
  4. suzan Liz says

    March 7, 2018 at 8:49 pm

    thank you so much, simple and understandable…….whoaa

    Reply
  5. Andres says

    March 11, 2018 at 8:26 am

    Hi. Thanks a lot or your work.
    I’m just wondering if it is possible, in an agreement to sell, for the buyer to use the goods even when the conditions are not yet fully satisfied? In other words, in an agreement to sell, can the buyer use the goods/property without the having the title of ownership.

    Reply
  6. Ykrao says

    August 31, 2018 at 10:51 am

    Very nicely explained. Very useful to students of llb, and competitive examination

    Reply
  7. shaikh saif ali says

    September 20, 2018 at 1:36 pm

    it is very easy to understand the concept here thank you so much

    Reply
  8. kelly says

    October 25, 2018 at 4:32 pm

    what is the differences between Agreement to Sales & Expression of Interest (EOI)?
    Thank you.

    Reply
  9. MMP says

    November 27, 2018 at 4:48 pm

    And what about the Absoulate sale and comdational sale

    Reply
    • Surbhi S says

      November 30, 2018 at 12:48 pm

      It will soon be updated on the site.

      Reply
  10. iswarya says

    December 11, 2018 at 6:48 am

    it was really very useful and easy to understand

    Reply
  11. Alex frank says

    April 29, 2019 at 12:58 am

    It is more than fantastic article much love to you guys

    Reply
  12. ARUN RAJVANSHI says

    January 31, 2020 at 1:05 pm

    BEAUTIFULLY EXPRESSED !!

    Reply
  13. Mamta says

    April 3, 2021 at 5:58 pm

    Thank you
    This answer was so helpful, easy to understand and language was so simple

    Reply
  14. MD ABUL HASAN says

    August 27, 2021 at 8:21 pm

    Very helpful. Thanks a lot

    Reply
  15. Vickliance says

    December 6, 2021 at 3:11 pm

    Wonderful

    Reply
  16. opio Stephen says

    June 6, 2022 at 8:27 am

    Wow good

    Reply
  17. opio Stephen says

    June 6, 2022 at 8:28 am

    Thanks so much for giving us such a good information

    Reply
  18. Carlyle Van Jour says

    March 27, 2023 at 9:56 am

    Awesome! Thank you so much for the much-respected Info,..greatly appreciate it..
    warm regards and thanks once again…

    Reply
  19. Simar says

    February 18, 2024 at 2:19 pm

    answer is very helpful 😄

    Reply

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