As per Section 2(e) of the Indian Contract Act, 1872, Agreement refers to ‘every promise and every set of promises, forming the consideration for each other’. Further, a promise is basically an offer or a proposal, created by an individual or an entity, towards another.
Agreement of Sale is generally executed in case of contingent and future goods. However, the subject matter might be un-ascertained goods. Here, the transfer of property in goods is delayed to a later stage and isn’t immediate. An Agreement to Sell is simply a contract pure and straightforward and creates jus in personam i.e., provides the right to the vendee against the vendor to sue for damages.
All agreements, that fulfills the pre-requisites enshrined under Section 10 of the Indian Contract Act, 1872 i.e., free consent, Lawful consideration, lawful object, and not expressly declared to be void under the provisions of the Contract Act, are recognized as a valid contract. The proviso to Section 10 of the Act makes it transparent that the Section is not applicable to contracts which are essential to be executed in writing or before a required number of witnesses or any law w.r.t registration of documents. Therefore, even oral agreements are recognized as valid. Also, a written agreement signed only by the vendor, if it evidences such an oral agreement will also be valid.
WHEN AN AGREEMENT OF SALE DOES COMES INTO EXISTENCE?
As per the ratio cited in Aloka Bose v. Parmatma Devi and Others [(2009) 2 SCC 582 (¶16&17)], an agreement of sale comes into existence when the seller agrees to sell and the buyer agrees to purchase, for a consideration on agreed terms. It can be oral or by way of barter of communications, where signature of the parties are not vital in nature. The parties may execute a single document signed by both parties or they can execute the said document in two parts, each party signing one copy and then exchanging the signed copy as a consequence of which the purchaser has the copy signed by the vendor and a vendor has a copy signed by the purchaser.
Or it can be by the seller executing the agreement/ contract and delivering it to the buyer who accepts it.
In any agreement of sale, the terms are always negotiated among the parties and post negotiation the same is reduced into an agreement of sale and signed by both parties or the vendor alone (unless it is by a series of offers and counter-offers by letters or other modes of recognized communication).
WILL AN AGREEMENT OF SALE SIGNED ONLY BY THE SELLER, AMOUNT TO UNILATERAL AGREEMENT?
In Lakshmi Ammal & Ors. v. J. Victor & Ors. [(1998) 3 L.W. 189] the following was quoted with approval
In this regard the following statement found at page 248 in the Book, namely “A. Treatise on the Specific Performance of Contracts” by The Rt. Hon. Sir Edward Fry G.C.B., (Sometime one of the Lords Justice of Appeal) is relevant which is extracted hereunder:
“515. The statute requiring that the agreement, or the memorandum or note thereof, shall be signed by the party to be charged therewith, or his agent, and not requiring that it shall be signed by both parties to the contract, it has been held, both in courts of Equity and also in
Common Law Courts, that a signature by the party against whom the contract is sought to be enforced is sufficient.
In R. Chinnadurai v. S. Rajalakshmi [AIR 2004 Madras 313]
“Where the alleged agreement of sale bore signature of the vendor only and in spite of denial of execution of the agreement by vendor, the purchaser examined only scribe and not the surviving attesting witness, the document is not a genuine document enforceable in law particularly when
there are improbable and unbelievable circumstances i.e. grant of two years’ period for making payment of remaining meager balance of consideration without handing over possession to the intended purchaser.”
In S.M. Gopal Chetty v. Raman [AIR 1998 Mad 169]
In India, an agreement of sale signed by the vendor alone and delivered to the purchaser, and accepted by the purchaser, has always been considered to be a valid contract. In the event of In M. Kantha v. P. Valmurthy [Appeal Suit No. 493 of 2008]breach by the vendor, it can be specifically enforced by the purchaser.
WHETHER ORAL AGREEMENT CAN BE ENFORCED?
The Hon’ble Supreme Court in the matter of Brij Mohan & Ors.Vs Sugra Begum & Ors. 1990 SCC (3) 413 held as under:
‘There is no requirement of law that an agreement or contract of sale of immovable property should only be in writing. However, in a case where the plaintiffs come forward to seek a decree for specific performance of contract of sale of immovable property on the basis of an oral agreement along, heavy burden lies on the plaintiffs to prove that there was consensus ad-idem between the parties for a concluded oral agreement for sale of immovable property. Whether there was such a concluded oral contract or not would be a question of fact to be determined in the facts and circumstances of each individual case. It has to be established by the plaintiffs that vital and fundamental terms for sale of immovable property were concluded between the parties orally and a written agreement if any to be executed subsequently would only be a formal agreement incorporating such terms which had already been settled and concluded in the oral agreement.’
In the said judgment the Hon’ble Supreme Court further relied on an earlier decided case In Kollipara Sriramula v. T. Aswathanaryana & Ors. [1968]3 SCR 387 wherein it was held as follows:
“It is, therefore, not possible to accept the contention of the appellant that the oral agreement was ineffective in law because there is no execution of any formal written document. As regards the other point, it is true that there is no specific agreement with regard to the mode of payment but this does not necessarily make the agreement ineffective. The mere omission to settle the mode of payment does not affect the completeness of the contract because the vital terms of the contract like the price and area of the land and the time for completion of the sale were all fixed.”
AGREEMENT BY EMAIL
An important judgment on the issue whether there can be concluded contract by email is Trimex International Fze Limited v. Vedanta Aluminium Limited wherein the Hon’ble Supreme Court was dealing with a matter wherein the parties had been exchanging emails and there was no
other formal contract which was written. The party invoked arbitration on the basis that emails had been exchanged and the same showed a concluded contract. The Hon’ble Supreme Court
held as follows:
“Once the contract is concluded orally or in writing, the mere fact that a formal contract has not been prepared by the parties does not affect either the acceptance of the contract so entered into or implementation thereof.
A contract is said to be concluded when parties agree as to the ‘essential terms’ of the contract though minor details can be left over for them to decide later, albeit subject to satisfaction of other requirements as provided by S.10: without such essential terms being decided, contract cannot be enforced by law as it is deemed to be incomplete.”
CONCLUSION
After considering the above arguments, cases and the contentions put forward in said cases, it can be concluded that it is not necessary for both the parties to sign the agreement of sale, in order to enforce it. The buyer still has the right to enforce the said agreement of sale, even in case of absence of seller’s signature. Also, it is stated by both the Courts of Equity and the Common Law Courts, that a signature by the party against whom the contract is sought to be enforced is sufficient. The same ratio was reiterated in the case of Lakshmi Ammal (Supra), where the Judge has granted a decree in respect of the agreement to sell signed by the vendor alone and held that it is not necessary that it should be signed by both the parties.
