Legal

Aspects of
Business
Presented By:
Anupama Mishra - 16020471022
Deepika Shankar - 16020471004
Harshwardhan Grover16020471018

1. What is Contract of Sale?

2. What is Agreement to
Sell?
3. What is the difference
between the two?

What is Contract of Sale?

What is Sale?
The exchange of a commodity for money or the action of selling
something.

Sale of Goods is a special form of contract

All the essential elements of Contract Act are applicable to the

Contract of Sale such as offer and acceptance, free consent, but
the provision of Consideration(something in return) stands amended
in a Contract of Sale because in any contract one kind of goods
can form consideration for other kind of goods; But in a Contract of
Sale of goods under the Sale of Goods Act, the consideration can
only be money.

What is Contract of Sale?

Section 4(1) defines a contract of sale of
goods as a contract whereby the seller
transfers or agrees to transfer the
property in goods to the buyer for a price.

Ownership transfer from seller to buyer for a price/money

Essentials of a contract of
sale:1. Two Parties: Two distinct parties to a contract of sale, namely a
buyer and a seller.
2. Goods: Subject matter of the contract of sale must be goods.
According to Section 2(7) of the Act, Goods means every kind of
movable property other than actionable claims and current money
and includes stock and shares, growing crops, grass and things
attached to or forming part of the land which are agreed to be
severed before sale or under the contract of sale.
Current money is not regarded as goods because it is a medium of
exchange with which goods can be bought. As per the act, only
money can be the consideration for the goods, there cannot be any
sale of money the consideration for which is money again.
Actionable claim means a claim which can be enforced by law or a
claim on the basis of which a legal action can be taken.
A bill of exchange or a promissory note represent a debt and hence are
actionable claims; they are not goods within the meaning of the Act.

Essentials of a contract of
sale:3. Transfer of Property: Property means ownership. A contract of
sale implies transfer of property (or ownership) from one person
(seller) to another person (buyer).
In a contract of sale, the seller must either transfer the property in the
goods or agree to transfer the same.

Essentials of a contract of sale

4. Price: The consideration for a contract of sale must be money
consideration called the price.
If goods are sold for other goods, the transaction is barter governed
under the Transfer of Property Act. It is not a sale of goods under this Act.
However, the goods can be sold for a consideration which is partly in
goods and partly in money.
5. Includes both a sale and an agreement to sell: When the
ownership or the property in the goods is immediately transferred from
the seller to the buyer, it is a contract of sale
On the other hand, when the transfer of property in the goods is to take
place at a future date or on the fulfillment of a certain condition, the
contract is called an agreement to sell/ conditional sale

Formalities of contract of sale

The Sale of Goods Act does not prescribe any formalities for the
formation of a contract of sale. There has to be an offer to buy or
sell goods and acceptance of that offer; parties to the contract must
be competent and there has to be a free consent. Further,
consideration for which goods are sold and bought must be money
consideration i.e. price. A contract of sale can be made in any of the
following forms:
there may be immediate delivery of goods;
there may be immediate payment of price but the delivery of goods
to be made at a future date;
there may be immediate payment of price and immediate delivery
of goods;
it may be agreed that the delivery or the payment or both are to be
made in instalments; or
the delivery or the payment or both may be given at some future
date.

Formalities of contract of sale

Again, a contract of sale may be oral or written. Similarly, it
can be express or implied.
A written offer may be accepted verbally or a verbal offer may
be accepted in writing.
It can be also be partly in writing and partly oral.
The Act does not lay down any formalities to be complied
with for the formation of contract of sale.

Distinction between Sale and

Agreement to Sale
SALE
1. Nature of contract
It is an executed contract plus
conveyance.

2. Transfer of property

AGREEMENT TO SALE
It is an executory contract. It is a pure
and simple contract and no ownership
passes.

The transfer of property takes place at

The property in goods passes from the some future time.
seller to the buyer when contract is
made.

3. Risk of loss
The buyer immediately becomes the
As the seller remains the owner, the
owner of the goods, so the risk passes risk is with the seller.
to the buyer.

4. Consequences of breach
Once sale is over and the seller breaks
the contract by reselling the goods,
the buyer may sue for delivery of
goods or for damages.

5. Insolvency of buyer
If the buyer is adjudged as insolvent,
the seller, in the absence of lien over
the goods, is bound to deliver the
goods to the Official Receiver or
Assignee. The seller is entitled to a
ratable dividend for the price of the
goods.

On breach of an agreement to sell by

the seller, the buyer has only a
personal remedy against the seller.
(he cannot insist on delivery of goods
but can ask for compensation only)
If the buyer becomes insolvent before
he pays for the goods, the seller may
not hand over the goods to the buyer.

6. Insolvency of seller
If seller becomes insolvent, then the
buyer is entitled to recover the goods
from the Official Receiver or
Assignee.

If the buyer has already paid the price

and the seller becomes insolvent, the
buyer can claim only a ratable
dividend and not the goods.

7. General and particular

An agreement to sell creates a right

property
in personem. The buyer and seller get
Sale creates a right in rem. In case of remedy against each other only in
sale, the buyer gets an absolute right case of breach of an agreement. An
of ownership and this right of buyer is agreement to sell creates a right with
recognized by the whole world.
which only the contracting parties are
concerned and not the whole world.
The property in goods remains with
8. Right of resale
the seller and he can dispose of the
The property is with the buyer and
goods as he likes.
hence the seller cannot re-sell the
goods. If he sells the goods, the buyer
can recover the goods, sometimes
even from the third parties.

THANK YOU!!