Distinguish between sale and agreement to sale

by • 09/06/2013 • GeneralComments (0)304

Q.2      Distinguish between sale and agreement to sale?
 

Ans:     A ‘Sale’ and an ‘Agreement to Sell’ can be distinguished as under:

Basis of distinction

Sale

Agreement to sell

1. Transfer of ownership Transfer of ownership of goods takes place immediately Transfer of ownership of goods is to take place at a future time or subject to fulfillment of some condition.
2. Executed contract or

Executory contract

It is an executed contract because nothing remains to be 1 done. It is an executory contract because something remains to be done.
3. Conveyance of Property Buyer gets a right to enjoy the goods against the whole world including seller. Therefore, a sale creates jus in rem (Right against property). Buyer does not get such right to enjoy the goods. It only creates jus in personam (right against the person).
4. Transfer of risk Transfer of risk of loss of goods takes place immediately because ownership is transferred. As a result, in case of destruction of goods, the loss shall be borne by the buyer even though the goods are in the possession of the seller. Transfer of risk of loss of goods does not take place because ownership is not transferred. As a result, in case of destruction of goods, the loss shall be borne by the seller even though the goods are in the possession of the buyer.
5. Rights of seller against the buyer’s breach Seller can sue the buyer for the price even though the goods are in his possession Seller can sue the buyer for damages even though the goods are in the possession of the buyer.
6. Rights of buyer against the seller’s breach Buyer can sue the seller for damages and can sue the third party who bought those goods, for goods. Buyer can sue the seller for damages only.
7. Effect of insolvency of seller having possession of goods. Buyer can claim the goods from the official receiver or assignee because the ownership of goods has transferred to the buyer. Buyer cannot claim the goods even when he has paid the price because the ownership has not transferred to the buyer. The buyer who has paid the price can only claim rate able dividend.
8. Effect of insolvency of the buyer before paying the price Seller must deliver the goods to the official receiver or assignee because the ownership of goods has transferred to the buyer. He can only claim rate able dividend for the unpaid price. Seller can refuse to deliver the goods unless he is paid full price of the goods because the ownership has not transferred to the buyer.

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