Sale of Goods: What is Sale of Goods Contract?

As per Section 4(1) of the Indian Sale of Goods Act, 1930, the contract of sale of goods is defined as, “A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price.”

Few definitions under the Indian Sale of Goods Act, 1930, are:

• Goods: Every kind of moveable property other than actionable claims and money, includes stock and shares, growing crops, grass, and things attached to or forming part of the land, which are agreed to be severed before sale or under the contract of sale.
• Buyer: This means a person who buys or agrees to buy goods.
• Price: This means the money consideration for the sale of goods.
• Property: This refers to the general property in goods, and not merely a special property.
• Sale: Under a contract of sale, the property in goods is transferred from a seller to the buyer, it is called a sale.

Sale of Goods: Difference between Contract of Sale and Agreement to Sell

The ‘contract of sale of goods’ is a broader term that includes sale and an agreement to sell.  The agreement to sell is defined as a legal agreement between parties regarding the transfer of the property in the goods, that is to take place at future time period or subjected to execution of specific conditions.

Simply put, suppose you want to sell a house and a plot that comes with it. You can enter into an agreement to sell your property with a prospective buyer stating that in six months if the transaction is not complete, the agreement is null and void and that you get to retain the advance amount paid for this agreement and that you don’t need to return it if the buyer is unable to pay the rest of the amount agreed on to complete the transaction.

Here are few major differences between contract of sale and agreement to sell: