What is a ‘Sale’
A sale is a transaction between two parties where the buyer receives goods (tangible or intangible), services and/or assets in exchange for money. It can also refer to an agreement between a buyer and seller on the price of a security. A sale functions as a contract between the buyer and seller of the selected good or service.
Explaining ‘Sale’
A sale dictates that, in exchange for a certain amount of money or particular assets, the seller will provide the buyer with aforementioned good or service. In order to complete a sale, both parties must be deemed competent and be in agreements regarding the terms as set forth. Additionally, the good or service involved must be eligible for transference and the seller must have the authority to transfer the good or service to the buyer.
Sales Within the Global Marketplace
Every day, millions of people take part in countless sales transactions across the globe, creating a constant flow of assets which forms the backbone of the associated economies. Sales of goods and services within a retail market represent a more common form of sales transaction while the sale of investment vehicles in the financial markets represent highly refined value exchanges.
Sales Between Different Entities
A sale can be completed as part of the operation of a business, such as grocery stores and clothing retailers, as well as between individuals. Items purchased through a yard sale would be considered a sale between individuals while the purchasing a personal vehicle from a car dealership would represent a sale between an individual and a business. Sales can also be completed between businesses, such as when one raw materials provider sells available materials to a business that uses the materials to produce consumer goods.
Examples of Cascading Sales
When a typical middle-class person is purchasing their first home a sale occurs when the home is sold to the buyer. However, there are many layers of sales surrounding the deal such as a lending institution would sell financing, via a mortgage, to the homebuyer. The lending institution can then sell that mortgage to another individual as an investment. An investment manager could earn a living trading bundles of mortgages and other kinds of debt financing.
Further Reading
- R&D sensitivity to asset sale proceeds: New evidence on financing constraints and intangible investment – www.sciencedirect.com [PDF]
- Short Sale Restriction, Heterogeneous Beliefs and Stock Price Crash in China [J] – en.cnki.com.cn [PDF]
- The capital asset pricing model (CAPM), short-sale restrictions and related issues – www.jstor.org [PDF]
- Housing wealth and housing decisions in old age: sale and reversion – www.tandfonline.com [PDF]
- Fire-sale foreign direct investment and liquidity crises – www.mitpressjournals.org [PDF]
- Due on Sale and Prepayment Clauses in Real Estate Financing in California in Times of Flucuating Interest Rates-Legal Issues and Alternatives – heinonline.org [PDF]
- Empirical Study on the Relationship of Sale Price and Rent of House in China [J] – en.cnki.com.cn [PDF]
