When is a Sale a Sale: Everything You Need to Know
When is a sale a sale? Basically, a sale becomes a sale when one person gives something to another in exchange for money.3 min read
When is a sale a sale? Basically, a sale becomes a sale when one person gives something to another in exchange for money. While some sales can be informal, many involve a legal contract.
What Counts as a Sale?
In the legal realm, a sale is a contract between two parties. One party, the seller, agrees to provide something to a second party, the buyer, who agrees to pay a set price for the item. Sales contracts are different from bartering agreements in that the consideration in a sales contract is money instead of a good or service.
For a valid sale to occur, five characteristics must be present:
- Valid parties.
- An item available for sale.
- A specific price for the item.
- Consent of every party in the contract.
- Acts required to fulfill the contract.
For a sale to take place, there must be an item intended for sale, and the item must still exist upon execution of the sale. For instance, if you agree to sell your house but your house is destroyed before the sale, then there obviously cannot be a sale as the house no longer exists.
Sales are only valid if both parties have agreed to a price. It is possible for the parties to allow a third party to set the price of the item up for sale as long as the seller and the buyer agree to the price. Prices in sales contracts must meet three qualifications. First, the price listed must be an actual price. Second, the price should be certain. Finally, the price must be a sum of money.
A sale can only take place if the seller actually intends to enforce payment. For example, if you agree to sell an item to someone, and then later tell the buyer that they don't have to pay you for the item, this would be a gift instead of a sale, because the seller never actually received payment.
Sales must involve a sum of money. If, for example, you agreed to give someone your car in exchange for their motorcycle, this would be an exchange instead of a sale. While both items do have value, the transaction doesn't involve money, meaning no sale took place.
Consent of the Parties
For any contract to be valid, both parties must consent to the terms of the contract. In a sales contract, this means that the seller has agreed to sell an item and the buyer has agreed to purchase the item for a price. When negotiating a sales contract, it's important to understand that agreeing to actually make a sale is different from agreeing to enter into a contract at a later time.
Like most contracts, consent to a sales contract can either be express or implied. If both parties express their consent in writing, there can be no doubt that a contract exists between the parties. For instance, it is very common for two parties to agree to a sales contract through correspondence such as a letter or email. In some cases it's possible to verbally express consent, although the contract may not be valid if the law requires written consent.
Consent can also be given through the actions of the parties. For example, if you intend to sell your car to another person and leave the car at their house, the other person may have implied their consent if they start using the car.
Consent can only exist if both parties actually agree on what item is to be sold. If you are a buyer and agree to purchase one item, and the seller attempts to sell you another item, then there is not a sale. For instance, if you agree to by an apple and the seller tries to give you an orange, no sale has taken place because the two parties do not agree on the object being sold.
Similarly, there can only be consent if both parties agree on the price of the item in the contract. If the seller wants more than the buyer wants to pay, there is not an agreement and, therefore, no consent.
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