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Topic 2: DIFFERENCE BETWEEN CONTRACT OF SALE AND AGREEMENT TO SELL

DIFFERENCE BETWEEN SALE AND
AGREEMENT TO SELL


Basis

Contract
of sale

Agreement
to sell

1.       Meaning

A contract
where the seller transfers the property in goods to the buyer for a price is
a contract of sale.

An agreement
where the seller agrees to transfer the property in goods to the buyer in
future or upon the fulfilment of certain conditions is called an agreement to
sell.

2.       Nature of contract

It is
an executed contract where both parties have performed.

It is
an executory contract where property in goods is to be transferred in future.

3.       Transfer of property

Property
is immediately transferred at the time of making the contract.

Property
is transferred in future upon the fulfilment of conditions.

4.       Risk of loss

Risk of
loss shifts with the transfer of property to the BUYER.

Until and
unless the property is transferred, risk of loss remains with the SELLER.

5.       Breach by buyer

If the
buyer commits breach of contract, then the seller can sue for the price and
also claim damages.

If the
buyer commits breach, the seller can only sue the buyer for the damages for
non – acceptance of goods or non – payment.

6.       Breach by seller

When he
seller commits breach of contract, the buyer may sue the seller and obtain
the possession and ownership of goods as well as claim the damages.

When seller
commit breach, the buyer can only sue the seller for the damages and avail
the personal remedy against the seller.

7.       Insolvency of seller

If the
seller becomes insolvent, still the contract is performed by the official assignee
of Buyer.

When the
seller becomes insolvent and buyer had performed, the buyer can claim damages
and avail the personal remedy against the seller.

8.       Insolvency of Buyer

When the
buyer is declared insolvent, the contract is to performed by official
assignee of Buyer.

The buyer
on becoming insolvent cannot be forced to perform by the seller who has paid
in advance but damages can be claimed.

9.       General and particular property

The buyer
gets the RIGHTS in REM from the seller. That is, the ownership rights of
buyer are against the whole world.

The
buyer gets the RIGHTS in PERSONAM. That is, these are the rights of the buyer
only against the seller.

10.   Rights to RE-SELL

The seller
cannot resell the goods once the ownership rights are transferred by him to
the buyer.

The property
in goods is not transferred in an agreement to sell, therefore the seller
still can find another buyer, although he shall commit breach and shall be
liable for it to buyer.



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