Tuesday, December 25, 2012

What is the distinction between sale and agreement to sale?

  • An agreement to sell, which is also called an executive contract of sale, is a contract simply, and creates only a jus in personance; the property in the goods which forms subject matter of the contract remains in the seller, so that they may be taken in execution of his debts, and belongs on his bankruptcy to his trusty in bankruptcy; if they are destroyed the loss will, in the absence of excess agreement, have to be borne by him: and a breach by either party of the agreement will normally only give the other party a right to sue for damages.
  • The term ‘contract of sale’ includes both actual sales and agreement for sale.
  • The Supreme Court distinguished these two classes of contract –thus
An agreement to sell is a contact pure and simple whereas a sale is a contract plus conveyance. By an agreement to sale a jus in personance is caused by  a sale a jus in rem also is transferred. Where goods have been sold and the buyer makes the fault, the seller may sue for the contract price on the count of ‘goods bargained and sold’ but when an agreement to buy is broken, the seller’s normal remedy is an action for unliquidity damages. If an agreement to sell be broken, by the seller, the buyer has only a personal remedy against the seller. The goods are still the property of the seller, and he can dispose of them as he likes, but if there has been a sale and a seller breaks his engagement to deliver the goods, the buyer has not only a personal remedy against the seller but also the usual proprietary remedies in respect of the goods themselves. In many cases, too, he can follow the goods into the hands of third parties. Again, if there be an agreement of sale, and the goods are destroyed the loss as a rule falls on the seller, while if there has been a sale, the loss as a rule falls up on the buyer though the goods may have never come to his position. (The Instalment Supply Limited Vs STO Ahmedabad and others, 1974.)

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