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The Difference Between

What is the difference between a sale and an agreement to sell?

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2011-02-09 12:23:31
2011-02-09 12:23:31


A "sale" is (colloquially) a completed transaction where the only remaining duties of the buyer may be timely rejection after inspection, and the only remaining duty of seller is to honor any express or implied warranty. This assumes the full price was paid during the sale and the goods were delivered, otherwise, the sale is not technically complete.

An "agreement to sell" is a contract that envisions (or defines) a future sale, thus all conditions precedent and other terms (delivery, payment, etc), continue to be "executory", that is, are yet to be fully carried out. A breach of this contract could result in a court order of specific performance, or for damages caused by the loss of the opportunity to buy or sell.

  2. Transfer of property (ownership): - In a 'sale' the property in goods passes to the buyer immediately at the time of making the contract In 'an agreement to sell' there is no transfer of property to the buyer at the time of the contract.
  3. Risk of loss. The general rule is that unless otherwise agreed, the risk of loss primarily passes with property (Sec. 26). Thus in case of sale, if the goods are destroyed the loss falls on the buyer even though the goods may never have come into his possession because the property in the goods has already passed to the buyer. On the other hand, in case of an agreement to sell where the ownership in the goods is yet to pass from the seller to the buyer, such loss has to be borne by the seller even though the goods are in the possession of the buyer.

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