Q. Explain the difference and “agreement to sell” and contract of sale. Discuss the essential features which govern the formation of two. (1998)
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“A contract where by the seller transfer or agrees to transfer the property or the goods to the buyer for a price.
1996 CLC 1758
3. Form of contract of sale
(iii) Implied i. e. from the conduct of the parties.
PLD 1973 Lac. 387
4. Essential features of sale:
Following are essential of sale.
(I) Bilateral contract:
The subject matter of sale must be goods meaning.
(a) Every kind of moveable property other than actionable claims and money and includes
(b) Things attaching to earth can be subject matter of sale provided they are served from earth under the contract.
(IV) Transfer of ownership:
There must be agreement or agree to transfer the property to the buyer.
(V) Sale and agreement to sell:
The term contract of sale includes, both ‘sale’ and agreement to sell.
(VI) Essentials of a valid contract:
Contract of sale must have all the essential of a valid contract.
5. Distinction between ‘sale’ and agreement to sell:
Following are the main points of distinction.
(I) Transfer of property:
In contract of sale property is transferred from sellor to buyer.
In an agreement to sell only promise is to made to transfer the property.
(III) Types of goods:
(IV) Consequences of breach:
If buyer commits default the seller may sue him for the price in contract of sale.
In an agreement to sell, the buyer can only sue for the damages.
(V) Nature of contract:
Contract of sale is an executed contract.
An agreement to sell is an executor contract.
(VI) Right of resale:
In contract of sale, seller cannot resell except in certain cases.
In an agreement to sell, the seller can resale to the new buyer.
(VII) Nature of performance:
A contract of sale is a contract which is being performed.
An agreement to sell is a contract which is to be performed.
(VIII) Insolvency of buyer:
In contract of sale, if buyer becomes insolvent seller can use his right of line or stoppage.
In an agreement to sell, seller can refuse to deliver the goods.
(IX) Insolvency of seller:
In a contract of sale buyer is entitled to recover the goods from official receiver. So he has no risk.
In an agreement to sell a buyer can only claim dividend.
To conclusion it can be said that, a contract of sale and agreement to sell are different terms. Contracts of sale includes both the sale and an agreement to sell. Like any other contract it is formed by an offer and acceptance by the persons of the contract. An agreement to sell becomes sale when that something which prevented the property from passing from the seller to the buyer is done or fulfilled, resulting in the passing of the property in the goods sold from the seller to the buyer.
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