Contract Of Sale

contract-of-sale

The expression contract of sale literally meanings of contract where one person transfer absolute interest in the subject matter movable property goods to another in lawful consideration for the price paid for promised, partly paid and partly promised. The transferor is called the seller or vendor .the transferee is called the buyer or purchaser or vendor, and the consideration is called price.



Definition

Section 4(1) of the sales of goods act 1930 defines the contract of sale of goods as a contract whereby the seller transverse or agree to transfer the property in good to the buyer for a price.

Section 4. Sale and agreement to sell under sales of goods act 1930:

  1. A contract of sale product could be a contract whereby the vendor transfers or agrees to transfer the property in goods to the client for a worth. There could also be a contract of sale between one possessor and another.
  2. A contract of sale could also be absolute or conditional.
  3. Wherever underneath a contract of sale the property within the product is transferred from the vendor to the client, the contract is called a sale, but where the transfer of the property within the product is to require place at a future time or subject to some condition thenceforth to be consummated, the contract is called an agreement to sell.
  4. An agreement to, sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.

The person who to sells or agrees to sell is called seller or vendor section 2 (13). The person who buys or agrees to buy is called Buyer or purchaser, section 2(1). The contract between the seller and the buyer is called the contract of sale. The contract of sale as stated above includes both sale and agreement to sell.



Essential Elements

To constitute a contract of sale and following an ingredient is to be satisfied:

  • There must be at least two parties
  • There must be an agreement between the two parties
  • The subject matter of the contract must be goods
  • There must be a transfer of subject matter goods from the seller to the buyer
  • There must be a lawful consideration known as price.
  • Two parties: The constituted sale there must be at least two parties a seller and a buyer and they must be different persons from a person cannot by his own goods.
  • Agreement: To constitute a transaction of sale should be an agreement express or implied relating to goods to be completed by passing of title in those goods they must be an agreement between the parties for the sale of every good in which an eventually property passes.
  • Goods: The subject matter of the contract of a sale must always be goods the word good has been defined in section 27 of the sales of goods act 1930 according to product suggests that all kinds of movable property aside from just claim and cash and includes stock and share growing crops grass and things hooked up to or forming a part of the land which are agreed to be served before sale or under the contract for sale.


  • Section 27. Sale by a person not the owner under sale of goods act 1930. Subject to the provisions of this Act and of the other law for the present in effect, where goods are sold by a person who is not the owner thereof and WHO doesn’t sell them underneath the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the products is by his conduct precluded from denying the seller’s authority to sell: Provided that, where a mercantile agent is, with the consent of the owner, in possession of the goods or of a document of title to the goods, any sale made by him, when acting in the ordinary course of business of a mercantile agent, shall be as valid as if he was expressly authorised by the owner of the goods to form the same; given that the client acts in straightness and has not at the time of the contract of sale notice that the vendor has no authority to sell.
  • Transfer: One of the most essential elements of a contract of sale is the transfer of the property in goods to the buyer. indeed it is the essence of a contract of sale but a Transfer of Property in goods has to be distinguished from a mere transfer of goods by the owner from one place to another which does not amount to sale. When a customer goes to a restaurant and order food and in respect of which he pays the price to indicate there in the sale said food item is supplied to him it would clear a case of Transfer of Property in the goods to the customer. whether the customer eats and enter or part of the dish or chooses not to eat at all would make no difference if he pays for the dishes supplied. The moment the dish is supplied and sale price paid it would amount to sale.
  • Price: Yet another essential element of a contract of sale price its consideration in terms of money .since an agreement without consideration is void by virtue of section 25 of Indian Contract Act 1972 a contract of sale also will not be complete without some consideration. In case of a contract of sale and consideration must be some price its consideration in term of money. It is these special features which distinguish a contract of sale from barter or exchange. What is required is the there must be some consideration in money. Therefore where goods are exchanged partly for goods and partly for money or exchange of goods or alternative the price it will still constitute a contract of sale.



Section 25 under Indian Contract act 1972:

Agreement inconsiderately, void, unless it’s in writing and registered or could be a promise to complete one thing done or could be a promise to pay a debt barred by limitation law.—An the agreement made without consideration is void, unless— —An agreement made without consideration is void, unless—”

  1. It is expressed in writing and registered underneath the law for the nowadays in effect for the registration of [documents] and is made on account of natural love and affection between parties standing in a very close to relevancy every other; or unless
  2. It is a promise to compensate, totally or partly, an individual United Nations agency has already voluntarily done one thing for the communicator, or one thing that the communicator was wrongfully compellable to do; or unless.
  3. It is a promise, created in writing and signed by the person to be charged with that, or by his agent typically or specially licensed in this behalf, to pay wholly or part a debt of that the human might have enforced payment aside from the law for the limitation of suits. In any of these cases, such associate agreement may be a contract.

Explanation one: Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made.

Explanation a pair of.—An Agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate, but the inadequacy of the consideration may be taken into consideration by the Court in crucial the question whether or not the consent of the communicator was freely given. Illustrations

  • A promise, for no consideration, to give to B Rs. 1,000. This is a void agreement. (a) A promise, for no consideration, to give to B Rs. 1,000. This is a void agreement.”
  • A, for natural love and affection, promises to give his son, B, Rs. 1,000.
  • A puts his promise to B into writing and registers it. This is a contract.
  • A, for natural love and tenderness, promises to give his son, B, Rs. 1,000.
  • A puts his promise to B into writing and registers it. This is a contract.”
  • A finds B’s purse and gives it to him. B promises to give A Rs. 50. This is a contract. (c) A finds B’s purse and gives it to him. B promises to give A Rs. 50. This is a contract.”
  • A supports B’s infant son.
  • B guarantees to pay A’s expenses in thus doing. This is a contract. (d) A supports B’s infant son. B promises to pay A’s expenses in so doing. This is a contract.”
  • A owes B Rs.1,000, however, the debt is barred by the Limitation Act. A signs a written promise to pay B Rs.500 on account of the debt. This is a contract. (e) A owes B Rs. 1,000, but the debt is barred by the Limitation Act. A signs a written promise to pay B Rs. 500 on account of the debt. This is a contract.”
  • A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A’s consent to the agreement was freely given. The agreement could be a contract nevertheless the inadequacy of the thought.
  • A agrees to sell a horse price Rs. 1,000 for Rs. 10. A’s consent to the agreement was freely given. The agreement could be a contract nevertheless the inadequacy of the thought.”
  • A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A denies that his consent to the agreement was freely given.
  • A agrees to sell a horse price Rs.1,000 for Rs. 10. A denies that his consent to the agreement was freely given.” The inadequacy of the thought could be a truth that the Court ought to take into consideration in considering whether or not or not A’s consent was freely given.



Sale and Agreement to sell

Sale- Meaning: if the property in goods is immediately transferred from seller to buyer it is called sale.

Example-A sold 10 bags of rice to B against the payment of rupees 5000.

Sale Definition: Sale may be defined as a transfer of ownership in the goods by the seller to the buyer in exchange of price paid or promised or partly paid and partly promised. Agreement to sell meaning if the Transfer of Property in goods is to take place in future from the seller to bar it is called agreement to sell.

Example- A agrees to sell 10 bags of rice to B from rupees 5000 after getting the stock. Agreement to sell definition

It is a contract whereby the seller agrees to the buyer to transfer the title of ownership on a future date. Satisfying certain conditions.

Section 4: Distinction between Sale and agreement to sell

Following are the main differences between a sale and an agreement to sell

  1. In sale Property in goods Transfer from seller to buyer immediately, where the property in goods does not transfer immediately in agreement to sell.
  2. In a sale, it is an executed contract but in agreement to sell it is an executory contract.
  3. In a sale, it creates right in rem but in agreement to sell it creates rights in personal.
  4. In a sale, the seller can sue the buyer for breach of the contract but In agreement to sell the seller can sue the buyer only for damages but not for the price.
  5. In sale is liable for the sales tax but in agreement to sell is not liable for the sales tax.
  6. In a sale, the seller has no rights of resale but in agreement to sell seller has a right of resale.
  7. In a sale, if the goods are destroyed the loss is borne by the buyer even though the goods are in the possession of the seller but in agreement to sell the loss falls on the seller even though the goods are in the possession of the buyer.
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