1. CONTRACT OF SALE - is a legal contract.

It is a contract for the exchange of goods, services

or property that are the subject of exchange from seller (or vendor) to buyer (or purchaser) for an
agreed upon value in money (or money equivalent) paid or the promise to pay same. It is a specific
type of legal contract.

2. CHARACTERISTICS OF A CONTRACT OF SALE

a. Nominate - law gave it a name
b. Principal - can stand on its own; unlike accessory contract
c. Bilateral - imposes obligation on both parties
d. Onerous - with valuable consideration
e. Commutative - equal value is exchanged for equal value
f. Consensual - meeting of minds makes a perfect contract of sale but needs delivery to
consummate.
g. Title & not a mode - title gives rise to an obligation to transfer; it is a mode w/c actually
transfers ownership.

3. ESSENTIAL ELEMENTS OF A CONTRACT OF SALE

a. Two parties: There should be two parties namely the buyer and seller. In case the students of a
Hostel take meals in a mess run by them , there is no contract of sale because the student are
undivided joined owners, who are running the mess on cooperative basis. An undivided join owners
must be distinguished from a ‘part-owner’ who is a join owner with divisible share.

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b. Transfer of Property: ‘Property’ here means ‘ownership’. Transfer of property in the goods is

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another essential of a contract of sales of goods. A mere transfer of possession of the goods cannot

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be termed as sale. To constitute a contract of sale the seller must either transfer or agree to transfer
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the property in the goods to the buyer. Further, the term ‘property,’ as used in the Sale of Goods Act,
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means ‘general property’ in goods as distinguished from ‘special property’
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c. Goods: The subject-matter of the contract of sale must be ‘goods’ According to Section 2(7)
“goods means every kind of movable property other than actionable claims and money; and includes
stock and shares, growing crops, grass, and things attached to or forming part of the land which are
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agreed to be severed before sale or under the contract of sale.” Goodwill, trade marks, copyrights,
patents right, water, gas, electricity,, decree of a court of law, are all regarded as goods. In the case of
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land the grass which forms part of land have to be separated from the land.
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d. Price: The consideration for a contract of sale must be money consideration called the ‘price .’ If
goods are sold or exchanged for other goods, the transaction is barter, governed by the Transfer of
Property Act and not a sale of goods under this Act. But if goods are sold partly for goods and partly
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for money, the contract is one of sale (Aldridge vs Johnson).

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e. Includes both a ‘sale’ and ‘an agreement to sell.’ The term ‘contract of sale’ is a generic term
and includes both a ‘sale’ and an ‘agreement to sell’.
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f. Sale: Where under a contract of sale the property in the goods is immediately transferred at the
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time of making the contract from the seller to the buyer, the contract is called a ‘sale’ [Sec. 4(3)]. It
refers to an ‘absolute sale’, e.g. an outright sale on a counter in a shop. There is immediate
conveyance of the ownership and mostly of the subject matter of the sale as well (delivery may also
be given in future), It is an executed contract.
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4. NATURAL ELEMENTS - are those which are deemed to exist in certain contracts, in the
absence of any contrary stipulations, like warranty against eviction.

5. ACCIDENTAL ELEMENTS - are those which may be present or absent depending on the
stipulations of the parties, like conditions, interest, penalty, time or place of payment.

6. STAGES OF CONTRACT OF SALE:

a. Negotiation
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 b. Perfection by mere consent; performance may be demanded (specific performance)
c. Consummation

7. CONTRACT OF SALE vs CONTRACT TO SELL

Contract of Sale is an agreement between a buyer and a seller whereby the seller agrees to give or
deliver something to the buyer for a certain price which the buyer agrees to pay. In contracts like
this, when the buyer pays and the seller delivers, the transfer of ownership is also done at the same
time. This is usually not applicable to situations where the seller is not yet ready to deliver the thing
being sold. Nor is it applicable where the buyer is not yet ready to pay the price in full.

Contract to Sell is an agreement between a buyer and a seller whereby the seller promises to sell
something to the buyer and the buyer promises to buy it. But generally, in this kind of contract, the
ownership of the subject “thing” is not transferred to the buyer upon the signing of the contract.
There are usually conditions to be complied with by one or both of the parties. And the transfer of
ownership will only happen when those conditions are met.

8. ABSOLUTE SALE vs CONDITIONAL SALE

Absolute sale is a sale in which property passes to a buyer upon completion of an agreement or
bargain between the parties. An absolute sale takes place without conditions. The title is transferred
by the seller to the buyer without any restrictions other than payment of an agreed-upon amount of

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money.

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Conditional sale is a real estate transaction where the parties have set conditions.the sale of goods
according to a contract containing conditions, typically that ownership does not pass to the buyer
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until after a set time, usually after payment of the last installment of the purchase price, although the
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buyer has possession and is committed to acquiring ownership.

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9. DIFFERENT KINDS OF SALE

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· Direct sales, involving person to person contact

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· Channel sales, an indirect sales model, which differs from direct sales. Channel selling is a way for
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("B2B") sellers to reach the ("B2B") and ("B2C") markets through distributors, re-sellers or value
added re-sellers VARS.
· Pro forma sales
· Business-to-business – Business-to-business ("B2B")
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· Indirect, human-mediated but with indirect contact

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10. OPTION CONTRACT vs EARNEST MONEY

Option contract is an agreement between a buyer and seller that gives the purchaser of the option the
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right to buy or sell a particular asset at a later date at an agreed upon price. Options contracts are
often used in securities, commodities, and real estate transactions.
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Earnest money is a deposit made to a seller showing the buyer's good faith in a transaction. Often
used in real estate transactions, earnest money allows the buyer additional time when seeking
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financing. Earnest money is typically held jointly by the seller and buyer in a trust or escrow
account.

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