Sale A sale is a type of contract in which the seller transfers the ownership of goods to the buyer for a money consideration. Here the relationship amidst the seller and buyer is of creditor and debtor. It is the result of an agreement to sell when the conditions are fulfilled and the specified time is over. Agreement to Sell An agreement to sell is also a contract of sale of goods, in which the seller agrees to transfer goods to the buyer for a price at a later date or after the fulfilment of a condition. When there is a willingness of the both the parties to constitute a sale i.e. the buyer agrees to buy, and the seller is ready to sell the goods for monetary value. In an agreement to sell the performance of the contract is done at a future date, i.e. when the time elapses or when the necessary conditions are satisfied. After the contract is executed, it becomes a valid sale. All the necessary conditions required at the time of sale should exist in the case of an agreement to sell too. If the seller rescinds the contract, then the buyer can claim damages for the breach of contract. On the other hand, the unpaid seller can also sue the buyer for damages.

1. 11/20/2017
Difference b/w Sale & Agreement to Sell
LAW OF CONTRACT II

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TABLE OF CONTENTS
How Sale is made ........................................................................................................................2
Definition of Sale.........................................................................................................................2
Definition of Agreement to Sell ................................................................................................2
Contract of sale how made.........................................................................................................2
Existing goods ..............................................................................................................................2
Future goods ................................................................................................................................3
Comparison Chart.......................................................................................................................3
Difference between Sale and Agreement to Sale...................................................................4
What is the difference between 'Sale' and 'Agreement' to Sell'?.........................................5
Transfer of property (ownership):...........................................................................................6
Consequences of breach:............................................................................................................6
Right of resale:.............................................................................................................................6
Insolvency of buyer before he pays for the goods:.................................................................. 7
Insolvency of seller if the buyer has already paid the price:................................................ 7
Conclusion.................................................................................................................................... 7

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How Sale is made
Definition of Sale
A sale is a type of contract in which the seller transfers the ownership of goods to the buyer for a
money consideration. Here the relationship amidst the seller and buyer is of creditor and debtor. It
is the result of an agreement to sell when the conditions are fulfilled and the specified time is over.
Definition of Agreement to Sell
An agreement to sell is also a contract of sale of goods, in which the seller agrees to transfer goods
to the buyer for a price at a later date or after the fulfilment of a condition.
When there is a willingness of the both the parties to constitute a sale i.e. the buyer agrees to buy,
and the seller is ready to sell the goods for monetary value. In an agreement to sell the performance
of the contract is done at a future date, i.e. when the time elapses or when the necessary conditions
are satisfied. After the contract is executed, it becomes a valid sale. All the necessary conditions
required at the time of sale should exist in the case of an agreement to sell too.
If the seller rescinds the contract, then the buyer can claim damages for the breach of contract. On
the other hand, the unpaid seller can also sue the buyer for damages.
Contract of sale how made
 A contract of sale is made by an offer to buy or sell goods for a price and the acceptance
of such offer. The contract may provide for the immediate delivery of the goods or
immediate payment of the price of both, or for the delivery or payment by installments, or
that the delivery or payment or both shall be postponed.
 Subject to the provisions of any law for the time being in force, a contract of sale may be
made in writing or by word of mouth, or partly in writing and partly by word of mouth or
may be implied from the conduct of the parties.
Existing goods
At the time of sales if the goods are physically in existence and are in possession of the seller the
goods are called ‘Existing Goods’. Existing goods can be classified into ‘specific or
unascertained.’
a) Specific goods: Goods identified and agreed upon at the time of the making of the contract
of sale are called ‘specific goods’ [Sec. 2(14)]. It may be noted that in actual practice the
term ‘ascertained goods’ is used in the same sense as ‘specific goods,’ For example, where
A agrees to sell to B a particular radio bearing a distinctive number, there is a contract of
sale of specific or ascertained goods.
b) Unascertained goods: The goods, which are not separately identified or ascertained at the
time of the making of the contract, are known as ‘unascertained goods.’ They are indicated
or defined only by description. For example, if A agrees to sell to B one bag of sugar out
of the lot of one hundred bags lying in his godown; it is a sale of unascertained goods

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because it is not known which bag is to be delivered. As soon as a particular bag is
separated from the lot for delivery, it becomes ascertained or specific goods.
The distinction between ‘specific’ or ‘ascertained’ and ‘unascer¬tained’ goods is important in
connection with the rules regarding ‘transfer of property’ from the seller to the buyer.
Future goods
Future goods are goods to be manufactured or produced or yet to be acquired by seller. There
cannot be present sale in respect future goods because the property cannot pass.
Example
a) A agrees to sell to B all the milk that his cow may yield during the coming year. This is a
contract for the sale of future goods.
b) X agrees to sell to Y all the mangoes, which will be produced in his garden next year. It is
contract of sale of future goods, amounting to ‘an agreement to sell.’
Comparison Chart
BASIS FOR
COMPARISON
SALE AGREEMENT TO SELL
Meaning When in a contract of sale, the
exchange of goods for money
consideration takes place
immediately, it is known as
Sale.
When in a contract of sale the parties
to contract agree to exchange the
goods for a price at a future specified
date is known as an Agreement to
Sell.
Nature Absolute Conditional
Type of Contract Executed Contract Executory Contract
Transfer of risk Yes No
Title In sale, the title of goods
transfers to the buyer with the
transfer of goods.
In an agreement to sell, the title of
goods remains with the seller as
there is no transfer of goods.
Right to sell Buyer Seller

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BASIS FOR
COMPARISON
SALE AGREEMENT TO SELL
Consequences of
subsequent loss or
damage to the goods
Responsibility of buyer Responsibility of seller
Tax VAT is charged at the time of
sale.
No tax is levied.
Suit for breach of
contract by the seller
The buyer can claim damages
from the seller and proprietary
remedy from the party to
whom the goods are sold.
Here the buyer has the right to claim
damages only.
Right of unpaid seller Right to sue for the price. Right to sue for damages.
Difference between Sale and Agreement to Sale
‘Sale’ and ‘Agreement to Sell’ can be distinguished on the following grounds:
1. In a sale the buyer becomes the owner of the goods at the time of making of contract but
in an agreement to sell buyer becomes owner of goods at a later time.
2. A sale makes the buyer the owner of the goods. He can exercise al the proprietary rights in
respect of them, such as an action for conversion or detenue. He acquires a jus in rem, that
is, a right against the goods. The effect is that if the seller refuses to deliver the goods, the
buyer may sue for recovery of the goods by specific performance. If the seller has resold
the goods to another person, the buyer may follow the goods in his hands, unless that other
had bought them in good faith and without notice.
On the other hand, an agreement to sell is a contract pure and simple. It is not a conveyance. The
buyer’s right are only personal against the seller, that is, a jus in personam. He can sue only for
damages for breach and not for recovery of goods.
3. In a sale, since the ownership in the goods has passed to the buyer, the risk of loss, if any,
of the goods is on the buyer. But in an agreement to sell, the seller remains the owner of
the goods and, therefore, he runs all the risks.
4. In a sale, if the buyer commits default, the seller may sue him for the price, that is, for
specific enforcement of the contract. In an agreement to sell, the seller’s only remedy is to
sue for damages for breach.

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5. Sale is an executed contracted, where there is a contract plus a conveyance, whereas an
agreement to sell is termed as executory contract pure and simple.
6. Nature of contract: Sale is an executed contract whereas an agreement to sell is an executory
contract. An executed contract is one which is immediately performed after being entered
into whereas an executory contract is one which is to be performed in future.
7. Transfer of ownership: In case of sale, the transfer of ownership from seller to the buyer takes
place at the time to contract. In case of agreement to sell, the transfer of ownership is to
take place at a future time or subject to the fulfillment of a condition.
8. Rights: In case of sale, the buyer exercise all the proprietary rights over the goods, like right
to possess or right to sell or use them in whatever manner. Such rights cannot be exercised
by the buyer in an agreement to sell.
9. Risk: In a sale, the buyer is responsible for any loss or destruction of goods even if the goods
are in the possession of the seller. In an agreement to sell, the seller is responsible for the
loss even if the goods are in the possession of the buyer because the seller remains the
owner until the agreement to sell becomes a sale.
10. Right of seller against the buyer’s breach: In a sale in case of default by the buyer (refusal to
accept goods or pay the price), the seller may sue for price. But in an agreement to sell, if
the buyer fails to accept goods and pay for them, the seller can only sue for damages for
breach, and not for payment of the price.
11. Right of buyer against the seller’s breach: If there is a sale, and the seller commits a breach,
the buyer has not only a personal remedy against the seller, but also the remedies which an
owner has in respect of the goods such as a suit for conversion etc. In the case of an
agreement to sell, if the seller commits a breach, the buyer has only a personal remedy
against the seller, i.e., to sue for damages.
12. Right of resale: In case of sale, the seller cannot resell the goods even if the goods are in his
possession. If he does so he is guilty of breach of contract and buyer can claim damages
from the seller. In case of agreement to sell; the seller continues to be the owner. If he
resells the goods he is guilty of breach of contract and the original buyer can claim only
damages from him.
13. Insolvency of buyer: If the goods are in the possession of the seller and buyer becomes
insolvent then in case of sale, in the absence of a right of lien, the seller must deliver the
goods to the official receiver or assignee of the buyer. The seller will be entitled for rateable
dividend for the price due. But in case of agreement to sell if buyer becomes insolvent
before paying the price of goods, the seller may refuse to deliver the goods to the official
receiver because ownership of goods still rests with the seller.
14. Insolvency of seller: In case of sale if the seller; who is in possession of the goods, becomes
insolvent, the official receiver / assignee of the seller has to give goods to the buyer because
he is the owner of goods. But in case of agreement to sell if the seller becomes insolvent
the buyer cannot recover the goods from official receiver even if the price has been paid
by him. This is because he is not the owner.
What is the difference between 'Sale' and 'Agreement' to Sell'?
The following are the main points of distinction between a 'sale' and 'an agreement to sell':

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Transfer of property (ownership):
In a 'sale', the property in goods passes to the buyer immediately at the time of making the contract.
In other words, a sale implies immediate conveyance of property so that the seller ceases to be the
owner of the goods and the buyer becomes the owner thereof. It creates a jus in ram, i.e., gives
right to the buyer to enjoy goods as against the whole world.
In 'an agreement to sell', there is no transfer of property to the buyer at the time of the contract.
The conveyance of property takes place later so that the seller continues to be the owner until the
agreement to sell becomes a sale either by the expiry of certain time or the fulfillment of some
condition.
Thus where A agrees to buy 50 kg wheat from B and the wheat is yet to be weighed, the transaction
is an agreement to sell because as per Section 22, in such a case the property does not pass to the
buyer till the goods are weighed and the buyer has notice thereof. The transaction becomes a sale
and the property in the goods passes to the buyer after the wheat is weighed and the buyer has
notice thereof. An agreement to sell creates a just in personam, that is, it gives a right to either
buyer or seller against the other for any default in fulfilling his part of the agreement.
It is worth noting that this is the basic point of distinction between a 'sale' and 'an agreement to
sell.' All other points of distinction follow from this basic difference, i.e., whether the property in
the goods has passed or is yet to pass from seller to buyer, on the other hand, in case of an
agreement to sale where the ownership in the goods is yet to pass from seller to the buyer, such
loss has to be borne by the seller.
Consequences of breach:
In case of sale, if the buyer wrongfully neglects or refuses to pay the price of the goods, the seller
can sue for the price, even though the goods are still in his possession. In case of an agreement to
sell, if the buyer fails to accept and pay for the goods, the seller can only sue for damages and not
for the price, even though the goods are in the possession of buyer.
Right of resale:
In a sale, the property is with the buyer and as such, the seller (in possession of goods after sale)
cannot resell the goods. If he does so, the subsequent buyer having knowledge of the previous sale
does not acquire a title to the goods. The original buyer can sue and recover the goods from the
third person as owner, and can also sue the seller for the breach of contract as well as for the tort
of conversion. The right to recover the goods from the third person is, however, lost if the
subsequent buyer had bought them bonafide without notice of the previous sale (Sec. 30).
In an agreement to sell, the property in the goods remains with the seller and as such, he can
dispose of the goods as he likes and the original buyer can sue him for the breach of contract only.
In this case, the subsequent buyer gets a good title to the goods, irrespective of his knowledge of
previous sale. Further, goods forming the subject matter of an agreement to sell can also be
attached in execution of a decree of a court of law against the seller.

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Insolvency of buyer before he pays for the goods:
In a sale, if the buyer is adjudged insolvent before he pays for the goods, the seller, in the absence
of a 'right of lien' over the goods, must deliver the goods to the Official Receiver or Assignee. The
seller is entitled only to a rateable dividend for the price of the goods. But in an agreement to sell,
in these circumstances, the seller may refuse to deliver the goods to the Official Receiver or
Assignee unless paid for, as ownership has not passed to the buyer.
Insolvency of seller if the buyer has already paid the price:
In a sale, if the seller is adjudged insolvent, the buyer is entitled to recover the goods from the
Official Receiver or Assignee, as the property in the goods rests with the buyer. On the other hand,
in an agreement to sell, if the buyer has already paid the price and the seller is adjudged insolvent,
the buyer can only claim a rateable dividend (as a creditor) and not the goods, because property in
them still rests with the seller.
Conclusion
Under Pakistan Sale of Goods Act 1930, section 4 (3) deals with the contract of sale and agreement
to sell, where it has been clarified that the agreement to sell also come under sale. However, there
is a distinction between these two terms which we discussed above.