Difference between agreement to sell and contract of sale
Introduction
If ownership is transferred by the seller to the buyer under a contract for a price, it is called sale. If there is a promise that ownership will be transferred by seller to buyer at a future time under a contract for a price, it is called agreement to sell. In contract of sale the buyer becomes full owner of the property and in agreement to sell buyer does not become owner of the property because there is only agreement to sell
Definition of Contract of sale
Such contract when seller transfer or agrees to transfer the property or the goods to the buyer for a price is called contract of sale
And agreement to sell does not create any right in immovable property
Parties of the contract
Following are the two parties of a contract
Seller
Seller is a person who sells his property or goods to buyer for a price
Buyer
buyer is a person who purchases the property or goods from a seller for a price
Types of contract of sale
Following are the three types of the contract of sale
Stamped contract
A contract is an enforceable legal document only if it was stamped by legal authority. The stamp shows that the parties agree to take legal action if something happened unlawful.
Express contract
In an express contract, the parties state the terms and conditions either orally or in writing, at the time of its formation. The expression shows that the parties are agree to take legal action if something happened unlawful
Implied contract
In an implied contract, the parties do not state the terms and conditions of the contract by words such kind of contract is called implied contract of sale
Essential elements of sale
Following are the essential feature of the contract of sale
Buyer and seller
One person cannot become the buyer and also the seller; there should be two persons to a contract of sale, buyer and seller.
Price
Price is the consideration in the contract of sale for which good is being sold. If goods are being exchanged with goods it is not a contract of sale.
Goods
The subject matter of the sale is goods. All moveable property or goods and immoveable property or goods are the most important essentials of the contract of sale because without goods it is not possible of formation of contract of sale
Transfer of ownership
In contract of sale, ownership of the property or goods should be transfer to the buyers
Transfer of possession
In contract of sale, possession of the property or goods should be transfer to the buyers
Sale
When ownership is transferred by seller to buyer under a contract is called sale
Agreement to sell
When ownership will be transferred by seller to buyer at a future time under a contract is called agreement to sell
Essentials of a valid contract
The contract of sale must have all the essentials of a valid contract
Difference between sale and agreement to sell
Following are the differences between the sale and agreement to the sale
Transfer of property
In contract of sale, property transfers from seller to buyer and buyer becomes the owner
In agreement to sell, the seller only does the promise with buyer to transfer the property in future
Risk
In contract of sale, all risks transfers with the buyer
In agreement to sell, all risks remain with the seller
Tax
In contract of sale, tax imposed at the time of sale
In agreement to sell, there is no tax on agreement to sell
Availability of goods
In contract of sale, goods exists at the time of formation of the contract
In agreement to sell, goods may exist or may not exist at the time of formation of the agreement to sell
Nature of contract
In contract of sale, the nature of contract is absolute
In agreement to sell, the nature of contract is conditional
Right of resale
In contract of sale, seller cannot resell the goods to another buyer
In agreement to sell, the seller can resale the goods to another buyer
Damages or lost
In contract of sale, if goods get destroyed or lost after handing over, in this case buyer is liable
In agreement to sell, if goods get destroyed or lost in this case seller is liable
Bankruptcy of buyer
In a contract of sale, if the buyer becomes bankrupt. Seller can use his right of stoppage
In agreement to sell, seller can refuse to deliver the goods
Bankruptcy of seller
In a contract of sale, if the seller becomes bankrupt. Buyer has right to recover the goods from seller
In agreement to sell, buyer only can claim
Conclusion
A contract of sale and agreement of sale are two different terms. In contract of sale ownership transfers from owner to buyer and buyers becomes the new owner of the property or goods but in agreement to sell ,seller makes promise with buyer to sell the
property or goods at the future time. In contract it is necessary the existence of offer and acceptance without both of these ,contract cannot be framed