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    Question

    Under Section 4 of the Sale of Goods Act, 1930, what is

    the critical distinction between a "sale" and an "agreement to sell"? 
    A Sale is informal while agreement to sell must be in writing Correct Answer Incorrect Answer
    B In a sale, property in goods is transferred immediately; in an agreement to sell, property is to be transferred at a future time or subject to a condition Correct Answer Incorrect Answer
    C Sale requires payment while agreement to sell may be without consideration Correct Answer Incorrect Answer
    D Sale applies only to specific goods; agreement to sell applies only to future goods Correct Answer Incorrect Answer
    E Agreement to sell creates binding contract; sale creates no legal obligation Correct Answer Incorrect Answer

    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."

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