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CA Foundation · Business Laws · The Sale of Goods Act, 1930

Dinesh agrees to sell his car to Harpreet for Rs 4,00,000, with delivery and transfer of ownership to take place on 1 June next year. On the date of the agreement, which description is correct under the Sale of Goods Act, 1930?

It is an agreement to sell. Because ownership is to pass only on a future date, 1 June next year, the contract is executory. It will become a sale once that time arrives and property is transferred to Harpreet.

  1. AIt is a sale, as the contract is made and price is fixed
  2. BIt is an agreement to sell, as the transfer of property is to take place at a future timeCorrect
  3. CIt is a void agreement, as the delivery is postponed beyond one year
  4. DIt is a hire-purchase, as the price is paid later

Explanation

Where property in goods is to be transferred at a future time or subject to a condition to be fulfilled later, the contract is an agreement to sell. It becomes a sale when the time elapses or the condition is fulfilled. Option A is wrong because a sale requires an immediate transfer of property.

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