Sale and agreement to sell | Meaning | Differences

What is Sale?

If the property in the goods is transferred (transfer of ownership) from the seller to the buyer immediately it is known as sale.

What is Agreement to Sell?

If the property in goods is to be transferred to the buyer in future or subject to the fulfillment of certain conditions it is known as an agreement to sell.

Differences between Sale and Agreement to Sell

The following are the major differences between a Sale and Agreement to Sell.

Sale Agreement to Sell
1. The ownership rights are transferred to the buyer immediately. Here, the ownership rights are transferred to the buyer only in future.
2. If the goods are destroyed, the loss will fall on the buyer even if the goods are in the possession of the seller. If the goods are destroyed, the loss will fall on the seller even if the goods are in the possession of the buyer.
3. If the buyer fails to pay the price, the seller can sue him for the price. In a similar case, the seller can only sue the buyer for damages.
4. The seller cannot re-sell the goods (if he is keeping possession). If he does so, the second buyer does not get a good title. In case of re-sale by the seller, the second buyer gets a good title provided he buys in good faith. The first buyer can only sue the seller for damages.
5. It creates 'jus in rem' (right against the world) i.e., right to a enjoy the goods against the whole world. It creates 'jus in personam' (right against a person) i.e., right to the buyer to sue the seller for damages.
6. If the buyer becomes insolvent before paying the price, the seller can get only a rateable dividend from the buyer's estate towards the price. If the buyer becomes insolvent before paying the price, the seller is not bound to part with the goods.
7. If the seller becomes insolvent, the buyer can recover the goods from the Official Receiver. If the buyer has already paid the price and the seller has become insolvent, the former can claim only a rateable dividend from the latter's estate and not the goods.

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