Define a Contract of Sale and explain its essential elements.

According to Section 4 of the Sales of Goods Act, contract of sale of goods means “a contract where by the seller transfers or agrees to transfer the property in goods to the buyer for a price.” A contract of sale may be absolute or conditional according as the parties desire. It may be between one part-owner and another. The term “contract of sale” is a generic term. A contract of sale may be either a sale or an agreement to sell.

Sale: Where under a contract of sale, the property in goods is immediately transferred from the seller to the buyer, the contract is called a sale. Thus, it is an executed contract.

Agreement to Sell: Where under a contract of sale, the transfer of property in goods is to take place at a future time or subject to the fulfillment of certain conditions, the contract is called an agreement to sell. It is an executory contract. An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods was to be transferred.

Essentials of Contract of sale:

Two Parties: A sale has to be bilateral because the property in goods has to pass from one person to another. Therefore there must be two parties seller and buyer. A person cannot buy his own goods.

Goods: The subject-matter of the contract of sale must be goods i.e. movable property. Transactions involving sale and purchase of immovable property are out of the purview of the Sales of Goods Act. Contracts for providing a certain service cannot be taken as a contract for sale of goods.

Transfer of General Property: Transfer of property means transfer, of ownership rights. A mere transfer of possession of goods cannot be called sale. It does not mean that there should be physical delivery of goods.

Price: The consideration for sale of goods must be money i.e. price. Where goods are transferred for any other consideration, that will not be sale, but an exchange or barter. But in case the consideration consists partly of goods and partly of money, it will be taken as a contract of sale.

Contract: A contract of sale is a special type of contract. Being a contract it must fulfill all essential requirements of a valid contract as defined in Section 10 of Indian Contract Act, viz, competence of parties, free consent, consideration, lawful object and valid offer and acceptance.


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