A contract of sale is a type of legal contract that covers the exchange of goods or personal property between a seller (the vendor) and buyer (the purchaser). Sales of goods are generally covered by state laws as well as the Uniform Commercial Code. The requirements for contracts of sale may be different if one or more of the parties is an expert or merchant in the specific type of goods being exchanged.
A clearly written contract of sale should include: the parties’ names and contact information; clear descriptions of the items being sold; terms for payment and shipping; return policies; and any other legal considerations.
In most sales contracts, one party will be exchanging money for the goods or the property involved. However, it can also happen that the buying party will be “purchasing” the item by exchanging another property item rather than giving them money. Here, the “goods in exchange” refers to the property that will be used a payment instead of money.
In such contracts, it’s important that a description and enumeration of the goods in exchange also be included in the contract documents. That way, the parties will be clear on exactly which property was exchanged in the process.
Similarly, “services in exchange” refers to services that are used as payment instead of monetary fees. Both goods in exchange and services in exchange should be referenced in the contract if they will be a major part of the transaction.
A security interest is a piece of property or a legal interest in property that is transferred from the buyer to the seller in order to secure transfer of the sale item. It can be used like a down payment, or a promise that the buyer will make good on future payments. This is commonly the case if the transaction involves multiple or regular payments on the buyer’s behalf.
Thus, the contract of sale should also include a section on security interests if this is going to be a part of the transaction. The contract should state the terms related to the security interest, such as a listing of the security interest, and the circumstances under which the seller can keep the security interest.
In some cases, the court will issue damages award for money if the contract of sale has been breached. In other instances, the court may allow the parties to rewrite a portion of the contract, for example if there has been a mutual mistake regarding a contract term. Or, the court may allow the parties to cancel the entire contract and write a new one instead. This will all depend on the nature of the violation and whether each party had fulfilled their own contractual duties.
Contracts of sale can be fairly complex, even for seemingly straight-forward transactions. For example, if the parties will be exchanging goods or services rather than money, a clearly-written contract is needed to avoid any disputes in the future. If you need assistance with a contract of sale, you should contact a business lawyer immediately. Your attorney can help review the contract with you, and can be on hand to represent you in court if you need to file a lawsuit.