Sale of Goods - Agreement to Sell

Explain the nature of a contract of Sale of Goods and bring out clearly the distinction between a sale and an agreement to sell.

The Sale of Goods Act, 1930 was enacted on 15th March 1930 and came into force on 1st July 1930

Nature of a Contract of Sale of Goods

A contract of sale of goods is defined under Section 4 of the Sale of Goods Act, 1930. It involves the transfer of ownership of goods from the seller to the buyer for a price. The essential elements of a contract of sale include:

  1. Two Parties: There must be a buyer and a seller.

  2. Goods: The subject matter of the contract must be goods.

  3. Transfer of Ownership: The ownership of the goods must be transferred from the seller to the buyer.

  4. Price: The consideration for the contract must be money.

Distinction between Sale and Agreement to Sell

The distinction between a sale and an agreement to sell is crucial in understanding the nature of these contracts:

  1. Transfer of Ownership:

    • Sale: In a sale, the ownership of the goods is transferred immediately from the seller to the buyer.

    • Agreement to Sell: In an agreement to sell, the transfer of ownership is to take place at a future date or subject to some condition to be fulfilled.

  2. Risk:

    • Sale: The risk of loss or damage to the goods passes to the buyer immediately upon the sale.

    • Agreement to Sell: The risk remains with the seller until the ownership is transferred to the buyer.

  3. Remedies for Breach:

    • Sale: In case of a breach, the seller can sue for the price of the goods.

    • Agreement to Sell: The seller can only sue for damages and not for the price.

  4. Nature of Contract:

    • Sale: It is an executed contract.

    • Agreement to Sell: It is an executory contract.

Relevant Case Laws

  1. Sale:

    • Aldridge v. Johnson (1857): This case established that once the goods are unconditionally appropriated to the contract, the property in the goods passes to the buyer.

  2. Agreement to Sell:

    • Rowland v. Divall (1923): This case highlighted that in an agreement to sell, the buyer does not get the right to sue for the price of the goods until the ownership is transferred.

The above clarifies the nature of a contract of sale of goods and the distinction between a sale and an agreement to sell. 

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