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Difference Between Agreement to sell, Agreement of sale, Agreement for sale and Conveyance deed

Dated 4th November, 2020

AGREEMENT TO SELL- A right in personam

  • Section 4(3) of Sale of Goods Act, defines an Agreement to Sell as, “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.”
  • An Agreement to Sell is only the representation of intention to sell on part of Seller and a converse intention is reciprocated by the Buyer. However, the nature of the agreement remains conditional.
  • It is an executory contract and transfer of risk takes place only after the goods are transferred. Since the contract is executed after the goods have been delivered and the conditions precedent are fulfilled, the right to sell remains with the Seller and in case there is non-compliance of the Buyer with the terms of agreement the Seller will have a right to sell.
  • The Buyer or the Seller may seek breach-of-agreement money, damages when the other party fails to comply with the obligations of Agreement to Sell. If a Seller defaults, he must return all deposits, plus added reasonable expenses, to the Buyer. The Seller also has the right to sue for damages, where the perishable goods are lost due to fault of the Buyer.
  • After the time has to elapse or the conditions have to be fulfilled subject to which the property in the goods is to be is to be transferred, according to Section 4(4) of the Sale of Goods Act an agreement of sale becomes a sale and a right in rem is created.

AGREEMENT OF SALE

  • An agreement of sale is a legal document that outlines the terms of a real estate transaction. It lists the price and other details of the transaction, and is signed by the Seller and the Buyer. Unlike the Agreement to Sell where there is an offer and acceptance to transfer property in goods, the agreement of sale is executed for transfer of real estate.
  • The transfer of a property in an Agreement of Sale is on a future date and is subjected to further terms and conditions as agreed upon by the parties, making the terms of the agreement conditional as well, it  also represents the intention of the owner of the property to sell and the reciprocal intention on part of the Buyer.
  • An agreement of sale becomes a sale when the terms and conditions are satisfied or when the time lapses for the property to be transferred. Therefore similar to the Agreement to Sell upon fulfillment of the conditions and due payment of consideration an agreement of sale becomes a sale deed. If not, it is an agreement of sale and is an executory contract where charges are created upon the execution of contract.

AGREEMENT FOR SALE- SALE AGREEMENT

  • An Agreement for Sale or contract of sale according to Section 54 of Transfer of Property Act is a contract establishing that a sale of such property shall take place on terms settled between the parties.
  • It does not by itself create a charge, or any interest in such property. However unlike an agreement of sale it is not a mere representation of intentions of both the parties to enter into the transaction rather through this contract both the parties agree on the terms and conditions required to make the sale effective.
  • The transfer of possession and ownership takes place after the parties perform the agreed terms and conditions to make the sale effective.
  • Unlike agreement of sale a contract of sale institutes a right to obtain another document that is a sale deed. The purchaser on contract for sale may sue for specific performance of contract and also has the right to impose the obligations arising out of the contract against the transferees.
  • Agreement for Sale creates a charge on the property if the purchaser has pre paid a certain amount against the property for which the agreement was executed, he then is entitled to the share in property corresponding to the payment made, and similarly the Seller has a charge against the unpaid amount by the Buyer.

CONVEYANCE

  • All Sale Deed are conveyance deeds but all conveyance deeds are not sale deed, conveyance is not exclusive of sale transactions but also includes exchange, mortgage and lease deeds.
  • In terms of transfer of property, conveyance is the transfer of property from one person to another, it could either be through firstly, delivery of possession where the property is for a price less than rupees hundred and secondly by registration of deed where the price of tangible immovable property is rupees hundred or more a Conveyance Deed is to be registered.
  • Conveyance deed is a legal document that acts as a proof of transfer of ownership after the transfer of property from one person to another.
  • The difference between an Agreement for Sale, and Conveyance deed is that an Agreement for Sale contains a promise to transfer a property in question in future, on satisfaction of certain terms and conditions, an Agreement for Sale does not in itself, create any interest in or charge on a property. But, execution of conveyance ensures the transfer of ownership and possession; hence conveyance leads to transfer of immovable property and creation of charge.
  • Conveyance ensures creation of right in rem.

CONCLUSION

In conclusion, Agreement to sell is the document where parties represent their intention to enter into a transaction for sale of goods, and lay down the conditions precedent. When the agreement is for tangible movable property it is known as Agreement to Sale, in both the Agreement to Sell and Agreement to Sale no charge is created against the goods or property in consideration, payment even if made is liable to be returned. The legal document through which the parties enter into a contract and establish their obligations and liabilities to make the sale effective is known as Agreement for Sale, it leads to creation of charge for both parties in accordance with the consideration paid. The completion of sale of immovable property is demarcated through conveyance or transfer of the right of possession and ownership of property.

“Article by Ms Damini Srestha under internship of Adv Shankarlal Raheja

The Views herein are personal and while careful attention has been given to ensure that the information is accurate and assume no liability or responsibility for any reliance thereon. This article is merely information and knowledge sharing activity and is not a substitute to legal advice. We shall not be liable for any loss or damage caused due to any reliance thereof”.