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Difference between sale and sale agreement

febrero 9, 2020

An " Sales contract "a type of contract whereby one party (seller) transfers ownership of the goods or agrees to transfer it for money to the other party (buyer). A sales contract can be a sale or an agreement to be sold. In a contract sales, when there is an actual sale of goods, known as salt while if there is an intention to sell the goods at a certain time in the future or if some conditions are met, there is talk of a Agreement for sale .

Both the sale and the sales contract are types of contracts, where the former is a contract executed while the latter represents an executive contract. Many law students get confused between these two terms, but these are not the same thing. Here, in the article shown below, we explained the difference between the sale and the sales agreement, check it.

Comparative chart

Basis for comparison Sale agreement
SenseWhen in a sales contract, the exchange of goods for money is taken into account immediately, known as Sale.When in a sales contract the contracting parties decide to exchange the goods for a price on a specified future date known as a sales agreement.
NatureAbsoluteConditional
Contract typeContract executedExecutive contract
Transfer of risksNo
TitleOn sale, the title of goods transfers to the buyer with the transfer of goods.In a sales agreement, the title of the goods remains with the seller as there is no transfer of goods.
Right to sellBuyerSeller
Consequences of subsequent loss or damage to goodsBuyer responsibilityResponsibility of the seller
TaxThe VAT charged at the time of sale.No tax collected.
Dressed for breach of contract by the sellerThe buyer can request compensation from the seller and the proprietary remedy from the party to whom the goods are sold.Here the buyer has the right to claim only damages.
Right of the unpaid sellerRight to sue for price.Right to sue for damages.

Definition of sale

A sale is a type of contract in which the seller transfers ownership of the goods to the buyer for a cash consideration. Here the relationship between seller and buyer of creditor and debtor. the result of an agreement to sell when the conditions are met and the specified time is over.

Types of sales

The following are the essential conditions for sale:

  1. There must be at least two parts; one the buyer and the other the seller.
  2. The object of the sale is the goods.
  3. Payment should be made in the country's legal currency.
  4. The goods should pass from the seller to the buyer.
  5. All the necessary conditions of a valid contract should be present such as free consent, consideration, a lawful object, the ability of the parties, etc.

If the goods are sold and the property is transferred to the buyer, but the seller is not paid. Hence, the seller can go to court and file a lawsuit against the buyer for damages and the price. On the other hand, if the goods are not delivered to the buyer, he can also sue the seller for damages.

Definition of a sales agreement

A sales agreement also a contract for the sale of goods, in which the seller agrees to transfer goods to the buyer for a price at a later time or after the fulfillment of a condition.

When there is the will of both parties to make a sale, that is, the buyer agrees to buy, and the seller is ready to sell the goods for monetary value. In an agreement to sell the execution of the contract is done on a future date, i.e. when time elapses or when the necessary conditions are met. After the contract has been executed, it becomes a valid sale. In the case of a sales agreement, all the necessary conditions required at the time of the sale should exist.

If the seller terminates the contract, the buyer can claim compensation for breach of the contract. On the other hand, the unpaid seller can also sue the buyer for damages.

Key differences between sales and sales agreements

The main differences between the sale and the sales agreement are shown below:

  1. When the seller sells goods to the customer for a price, and the transfer of goods from the seller to the customer occurs at the same time, then known as Sale. When the seller agrees to sell the goods to the buyer on a specified future date or after the necessary conditions have been met, known as a sales agreement.
  2. The nature of the absolute sale while a conditional sale agreement.
  3. A sales contract is an example of a contract executed while the sales agreement is an example of an executive contract.
  4. The risk and benefits are transferred with the transfer of goods to the buyer for sale. On the other hand, the risks and rewards are not transferred because the goods are still in the possession of the seller.
  5. If the goods are lost or damaged later, in case of sale the buyer's responsibility, but if we talk about a sales agreement, the seller's responsibility.
  6. Tax imposed at the time of sale, not at the time of the sales contract.
  7. In the case of a sale, the right to sell the goods in the hands of the buyer. Conversely, in agreement with the sale, the seller has the right to sell the goods.

Conclusion

Under the Indian Sale of Goods Act 1930, Section 4 (3) deals with the sales contract and the sales agreement, where it has been made clear that the sell agreement also comes on sale. However, there is a distinction between these two terms which we have discussed above.

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