Facts of this case are as follows:
Vaswani who is a cloth merchant placed an order of 100 silk sarees, each worth of Rs 2000
with a Bangalore merchant. The goods were supposed to be delivered to Mumbai in a
fortnight’s time. Thus, Vaswani and the Bangalore saree dealer have entered into an
agreement to sell. That is, the Bangalore dealer has agreed to sell 100 sarees at the cost of
Rs 2000 per saree to Vaswani in Mumbai in a fortnight.
The legal implications between sale and agreement to sell are vastly different. The basic
difference between sale and agreement to sell has been explained in Section 4(3) of the
Sale of Goods Act, 1930. According to this section “Where under a contract of sale the
property in the goods is transferred from the seller to the buy the contract is called sale, but
where the transfer of the property in the goods is to take place at a future tine or subject to
some condition thereafter to be fulfilled, the contract is called agreement to sell”. Thus, in
case of agreement to sell, the ownership of the goods remains with the seller and the
ownership is not transferred to the buyer until the sale is complete. The ownership of the
sarees remains with the Bangalore dealer until he has delivered the goods and has been
compensated for it. However, the Bangalore dealer was unable to deliver the goods on time
due to some reasons. This is a breach to the agreement to sell contract. Due to this,
