Difference between Sale and Agreement to Sell

Difference between Sale and Agreement to Sell

Sale

1. Ownership Transference

The property (ownership or title) in the goods passes from the seller to the buyer immediately so that the seller is no more owner.

2. Risk of Loss

Where the goods sold under the contract of sale are destroyed, the loss falls squarely on the buyer as the ownership in the goods has already passed on to the latter. 

Even though the goods are in the possession of seller.

3. Consequences of violating the contract

Where the buyer fails to pay the price, the seller cannot seize the goods. The seller can only file a case against the buyer for violating the contract.

4. Nature of contract

It is an executed contract i.e. completed contract

5. Insolvency of the Buyer

In a sale, if a buyer becomes insolvent before he pays for the goods even though the goods sold are under the possession of the seller, the latter has to return them to the Official Receiver or Assignee as the ownership of goods has already been transferred to the buyer. The seller can claim only rateable dividend. The seller has to inevitably part with the possession of the goods under his custody.

6. Insolvency of the Seller

If the seller become insolvent before delivering the goods to the buyer, the buyer can claim the delivery of the goods from the Official Receiver or Assignee as the ownership is already passed on to the buyer.

Agreement to Sell

1. Ownership Transference

The property (ownership or title) in the goods has to pass at a future time or after the fulfilment of certain conditions specified in the contract.

2. Risk of Loss

Where the goods under the agreement to sell are destroyed, the loss falls squarely on the seller as the ownership is still vested with the seller even though the possession of the goods is with the buyer.

3. Consequences of violating the contract

Where the buyer violates the contract, the seller can repossess the goods from the former. He can sue for damages for violation of the contract.

4. Nature of contract

It is an executory contract, i.e. contract yet to be performed by the party to the contract.

5. Insolvency of the Buyer

If the buyer becomes insolvent before the payment of the price, the seller can retain the goods if they are under his possession or even he can repossess the goods even if the possession of the goods is transferred to the buyer. In other words, the seller is not bound to lose possession of the goods.

6. Insolvency of the Seller

The buyer cannot do so. Further if the buyer has already paid the price of the goods or made any advance, he can claim only rateable dividend and not the goods because the ownership in the goods is not yet passed to him.