Documente Academic
Documente Profesional
Documente Cultură
What is a Sale?
A "sale" is (colloquially) a completed transaction where the only remaining duties of the buyer may be timely rejection after inspection, and the only remaining duty of seller is to honor any express or implied warranty. This assumes the full price was paid during the sale and the goods were deli ered, otherwise, the sale is not technically complete.
Page 2
The Distinction
!ection "(#) of the sale of $oods Act defines a contract of sale of goods as % &a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price'. The definition of contract of sale of goods re eals that either actual sale or an agreement to sell both are co ered under the act. (ut, there are certain differences between the two. )here in a contract of sale, the property in the goods is immediately transferred from the buyer to the seller it is called a sale. )here under a contract of sale, the transfer of property in the goods is to ta*e place in the future or after the fulfillment of certain conditions, it is called +An agreement to sell'. A sale and an agreement to sell can be disting ished as!" #$ Trans%er o% &ro&ert' (o)nershi&*! ,n a -sale-, the property in goods passes to the buyer immediately at the time of ma*ing the contract. ,n other words, a sale implies immediate con eyance of property so that the seller ceases to be the owner of the goods and the buyer becomes the owner thereof. ,t creates a jus in ram, i.e., gi es right to the buyer to enjoy goods as against the whole world. ,n -an agreement to sell-, there is no transfer of property to the buyer at the time of the contract. The con eyance of property ta*es place later so that the seller continues to be the owner until the agreement to sell becomes a sale either by the expiry of certain time or the fulfillment of some condition. Thus where A agrees to buy ./ *g wheat from ( and the wheat is yet to be weighed, the transaction is an agreement to sell because as per !ection 00, in such a case the property does not pass to the buyer till the goods are weighed and the buyer has notice thereof. The transaction becomes a sale and the property in the goods passes to the buyer after the wheat is weighed and the buyer has notice thereof. An agreement to sell creates a just in personam, that is, it gi es a right to either buyer or seller against the other for any default in fulfilling his part of the agreement.
Page 3
Page 4
Page 5
Page 6
CASE ,AWS
1. Wood v. Manley (1 !"# 11$% &!4 A sale has the immediate effect of transferring property, where as in an agreement to sell the property is to pass at some time or future or subject to some condition. The sale of the whole of the haystac* on the seller6s far, the buyer ha ing the liberty to ta*e away when he li*es, is an immediate. '. White v. (il)s (1 1!# 5 *aunt 1"+ A contract to sell a portion of the oil from the seller6s cistern is an agreement to sale, since it is agreed to be carried out in future or on some condition. ,n other words, this transaction does not ha e immediate effect. !. ,nion o- India v. *ara .hand% $IR 1/"/ M0 111 The buyers rights are only personal against the seller, that is, a jus in personam. 7e can sue only for damages for breach and not for reco ery of goods. A contract to sell coal8ash which might accumulate at a particular pump house has been held to be an agreement to sell future goods. 4. Sale By *rans-er 2- 3o4ument 2- *itle *o 5oods The +sale by transfer of documents of title to goods6 has been interpreted by judiciary in many cases, some of them are cited subsequently for reference. 9ormally the sale is effected by endorsement of transport documents. 4n the bac*side of the document li*e, :.5. the endor can put his signature and transfer the documents to buyer. As held by (ombay 7igh ;ourt in case of ;hhaganlal !a chand (<0 ,T5 #22) the transfer of documents can be effected e en by deli ery. ,t is also held by judiciary that transfer of documents can ta*e place e en by instruction. Therefore it is not necessary that the sale by transfer of documents ta*es place when the document is first ta*en out between first seller and his buyer and then transferred by the buyer to his buyer. The buyer of first seller can gi e instruction to dispatch thegoods
Page 7
Page 8
<. Interstate Sale M7s. 8ate4hand .haturbhujdas vs. State o- Maharashtra (S.$. /4 o- 1//1 dated.1'9 91//1# de4ided by Maharashtra Sales *a: *ribunal 18 ,n this case the local party purchased goods from other local party and directed the same to be despatched to outside !tate party. > en though local party was shown as consignor, ta*ing the iew that while placing order there is term for outside place dispatches, ?aharashtra !ales Tax Tribunal heldthat the sale between two local parties is first interstate sale and the sale by local party to outside party is subsequent interstate sale, duly exempt u=s. <(0). ,n short e en if there is predetermined sale, there is no ad erse effect on the sale to be claimed u=s. <(0). 4n the other hand, in light of abo e judgments, the claim gets more authentic. The transfer of property to ultimate purchaser (consignee) gets synchroni@ed at the time of boo*ing the goods with the carrier and hence the subsequent sales ta*e place by transfer of documents of title to goods as held by 7igh ;ourt in abo e case of A" !T; 2#B. The claim of exemption is to be allowed under abo e circumstances subject to production of required forms. M7s. 3uvent 8ans 0. ;td. vs. State o- *amil Nadu (11! S*. 4!1#(Mad.# 18 :ocal dealer purchased goods from other local dealer and directed to send them to his purchaser6s place in other !tate. ?adras 7igh ;ourt held that the first transaction is first interstate sale and the second sale is also subsequent interstate sale exempt u=s.<(0) of ;!T Act. The abo e judgment is directly on issue and hence will go ern the field. ,n fact there are many judgments on this issue. 7owe er since the legal position about transfer of documents as well as predetermined sale is clear from abo e judgments, no further citations are gi en here for sa*e of bre ity.
Page 9
REFERENCES
Law of Contracts and Specific Relief, Avatar Singh, Eighth Edition, Eastern Book Compan !ndian Contract and Specific Relief Acts, Pollock and "#lla, $welfth Edition, %ol&', B#tterworths Contracts B (#tt
B#siness Laws, Ethics and Comm#nication, Board )f St#dies, $he !nstit#te of Chartered Acco#ntants )f !ndia*
Page 10