Under Section 4 of the Sale of Goods Act, 1930, what is the critical distinction between a "sale" and an "agreement to sell"? 

Solution

Section 4(3) provides: "Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a 'sale,' but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an 'agreement to sell.'" This distinction is crucial for determining rights and remedies. In a sale, ownership passes immediately to the buyer; hence, the buyer bears risk and can sue for specific performance. In an agreement to sell, ownership remains with the seller until the future condition is satisfied; hence, the seller bears risk and can sue for damages if the buyer breaches. Section 4(4) provides that "an agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred."