MBA Previous Years Questions
The Sale of Goods Act, 1930 makes a distinction between ‘sale’ and ‘agreement to sell’. Both of these terms refer to transactions involving the transfer of ownership of goods from the seller to the buyer, but they differ in their legal effect.
A sale is a contract in which the seller transfers the ownership of goods to the buyer for a price. In a sale, the ownership of goods is immediately transferred from the seller to the buyer. In other words, the buyer becomes the owner of the goods as soon as the sale is concluded.
For example, if A sells a laptop to B for Rs. 50,000, it is a sale. The ownership of the laptop is immediately transferred from A to B, and B becomes the owner of the laptop.
Agreement to Sell:
An agreement to sell is a contract in which the seller agrees to transfer the ownership of goods to the buyer at a future date or on the occurrence of a certain event, or subject to certain conditions being fulfilled. In an agreement to sell, the ownership of goods is not immediately transferred to the buyer, but it will be transferred at a later stage.
For example, if A agrees to sell a laptop to B for Rs. 50,000, but the laptop will be delivered to B after two weeks, it is an agreement to sell. The ownership of the laptop is not immediately transferred to B, but it will be transferred to him after two weeks when the laptop is delivered.
Distinction between Sale and Agreement to Sell:
The key difference between sale and agreement to sell is the transfer of ownership. In a sale, the ownership of goods is immediately transferred from the seller to the buyer, while in an agreement to sell, the ownership will be transferred at a later stage. In a sale, the seller has an immediate right to payment, while in an agreement to sell, the seller has a right to payment only after the ownership is transferred. Additionally, the risk of loss of goods also passes to the buyer in case of a sale, while it remains with the seller in case of an agreement to sell.
|Basis for Comparison
|Agreement to Sell
|Transfer of ownership
|At a future date or on certain event
|After transfer of ownership
|Right to sell
|Transfer of ownership
|Transfer of ownership pending
|Risk of loss
|Transfers to buyer
|Remains with seller until ownership transfer
|Legal status of contract