Distinguish between a Contract of Sale and an Agreement to Sell.
The points of distinction between a contract of sale and an agreement to sell are:
Sale is an executed contract while an agreement to sell is an executor contract.
Passing of Property:
In case of sale, property in the goods passes from the seller to the buyer at the time of making of contract. In case of sale, seller ceases to be the owner of the goods and the buyer becomes the owner thereof. It creates a jus in rem i.e. gives right to the buyer to enjoy goods as against the whole world. On the other hand, in an agreement to sell there is no transfer of property in goods at the time of contract.
The property in goods is transferred at some future date. Thus, seller continues to be the. owner until the agreement to sell becomes a sale. An agreement to sell creates a jus in personam i.e. it gives a right to either buyer or seller again* the other for any default in fulfilling his part of the agreement.
Nature of Rights:
An agreement to sell is a contract pure and simple and thus gives a right to either buyer or seller against the other for any default in fulfilling his part of agreement: In case the seller refuse to sell goods to the buyer, the buyer’s only remedy is to file a suit for damages, he cannot recover the goods. A sale is a contract plus conveyance and it gives right, to buyer to enjoy goods against the whole world. Tire buyer acquires the ownership rights in respect of them. In case the seller refuses, buyer can recover the goods.
Risk of Loss:
The rule is risk follows ownership. In a contract of sale, because ownership passes immediately to the buyer the risk also passes. In a sale the loss falls on the buyer, even though the goods are under the possession of seller. In case of an agreement to sell the loss falls on the seller, even through the goods are under the possession of the buyer.
Consequences of the Breach:
In case of breach of a sale by the buyer, seller can sue the buyer for the contracted price of the goods, though the goods still be in the possession of the seller. It is so because ownership has passed to the buyer. But in case of breach of an agreement to sell by the buyer, seller can sue the buyer only for the damage and not the price, since ownership has not passed to the buyer.
In case of breach of a sale by the seller, the buyer can sue for the recovery of the goods as well as for damages. But in case of breach of an agreement to sell by seller, the buyer can claim damages he cannot ask for the delivery of goods.
Right of Resale:
In an agreement to sell the seller being still the owner he can dispose of the goods as he likes. The seller can effectively convey title in the goods to another person and the original buyer can claim d”mages from the seller. The original buyer has got no rights against the new buyer or the goods. In a sale, a seller who is in possession of goods, cannot resell such goods because the property in goods is with the buyer. The original buyer can sue and recover goods as owner from the third party. He can also sue the seller for damages.