If you`re involved in buying or selling goods or property, you might come across two common terms — «contract to sell» and «contract of sale.» While the two might seem similar, they have some key differences that are important to understand.
A contract to sell refers to an agreement between two parties where one party agrees to sell goods or property to the other party at a future date, subject to certain conditions being met. In a contract to sell, ownership of the goods or property doesn`t transfer until the agreed-upon conditions are met. For example, if someone sells a house, they might have a contract to sell that specifies that the house won`t change ownership until the buyer has paid the full purchase price.
On the other hand, a contract of sale is an agreement where the seller agrees to transfer ownership of goods or property to the buyer in exchange for payment. In a contract of sale, ownership of the goods or property transfers immediately upon completion of the sale. For instance, when you purchase a car, you enter a contract of sale with the seller, and the car becomes yours as soon as you`ve paid for it.
One way to think of the difference between a contract to sell and a contract of sale is that the former is essentially a promise to sell, while the latter is the actual sale itself.
Another key difference between the two is how they`re treated under the law. In many countries, a contract to sell doesn`t give the buyer ownership rights until all the agreed-upon conditions are met. This means that if the seller breaches the contract, the buyer might be able to cancel the sale without any legal consequences. In contrast, a contract of sale gives the buyer ownership rights immediately, and if the seller breaches the agreement, the buyer might be able to sue for damages.
In summary, the main difference between a contract to sell and a contract of sale is the timing of the transfer of ownership. A contract to sell is a promise to sell goods or property at a future date, subject to certain conditions being met. In contrast, a contract of sale is the actual sale itself, where ownership of the goods or property transfers immediately upon completion of the sale. Understanding these differences is important, as it can help you ensure that you`re entering into the right agreement for your specific situation.