Agreement of sell is a set of terms and conditions to ensure that the sale is successful. In this article, we will look into the important points mentioned in the sales of goods act, 1930, which defines the laws regarding sales contracts and sales agreements.
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Sale and Agreement of Sale (mentioned in Section 4 of the Act)
The definition of a contract associates itself with a verbal or a formal agreement that can be enforced by law. The difference between a contract and an agreement is that a contract should contain an agreement, but an agreement is not always a contract. According to the sales and agreement of sale section 4, a sales contract is a contract where the seller has to transfer or agrees to transfer the property to the buyer when the buyer pays the decided price.
The sales and agreements of sale also state that the transaction has to be completed within the specified time and the conditions mentioned in the contract. The terms and conditions are generally set by the seller, while the buyer decides whether they will agree upon them. Moreover, the buyer can also propose certain salient points in the buyer and seller agreement notes. An important point to note that the law is applicable for both sales and agreements of sales.
When the goods are immediately transferred from the buyer to the seller after the payment of the decided price, then it is called a sale. Sales are carried out on readily deliverable goods. The sale takes place according to the sales contract immediately after the contingency is paid to the seller or any authority assigned by the seller.
Agreement of Sell
In agreement of sell, the ownership might not be immediately transferred from the seller to the buyer after payment of the fees. Rather, according to a sales agreement contract, the property will be transferred at a later date upon fulfilment of certain conditions, as mentioned in the contract. The definition is also mentioned in Section 4(3) of the sales and goods act.
Therefore, it can be concluded that the purchase and sales agreement can be both for sale and agreements. It depends on the conditions mentioned in the contract about the time of delivery of the product upon payment of the price. The selling agreement becomes a sale when the time of delivery in the contract elapses, or the conditions are fulfilled for the delivery of the product.
Essential Elements of a Contract of Sale
According to the Sales of Goods act, 1930, there are some essential elements that should be included in the purchase and sale agreement. These are:
There should be a minimum of parties involved in the contract. There must be at least one buyer and at least one seller.
The terms and conditions mentioned in the contract must pertain to the product only. The product is considered to be a movable property, which can be existing, in possession of the seller or goods of the future.
The sale of a business contract must consider the price that is needed to be paid or promised. The price must be paid in cash or kind.
The buyer and seller agreement can be absolute or conditional.
The contract must also have important elements like object legality, party’s competency, and consideration. These should be the ingredients of the business sales agreement.
You will learn more about the elements of a sales contract if you go through some solved questions on sale and agreement of sale.
What is the Conditional Sales Contract?
A conditional sales contract is defined as a financial negotiation where the buyer can have the possession of the asset, but the rights of possessions stay with the seller until the buyer makes the complete payment for the asset. The buyer can take and use the product after the agreement is made but will not own the property until the payment is made in full. For example, when a buyer buys any land, property, or vehicle and pays the price in instalments
Although the buyer can use the land or the vehicle, the buyer will not be the owner of the property; failure of payment of any of the instalments entitles the seller to take over the possession. Conditional sales agreements are a special type of sale contract example generally applied in real estate business or financing of equipment, vehicles, costly electronics and pieces of machinery.