An agreement for the sale of goods is a type of contract. The two contracting parties are a buyer and a seller, and they agree to exchange ownership of something for money. This is different from other forms of exchange where money is not involved, such as barter, trade, or exchanging goods for labor.
Sale of Good Agreement Lawyers
- How Can I Be Sure a Valid Agreement for the Sale of Goods Has Been Made?
- What Are the Elements in a Sale of Goods Agreement?
- Can Anyone Be a Buyer or Seller?
- Are There any Criteria for Setting Prices in a Contract?
- Does the Sale of Goods Agreement Have to Be in Writing?
- How Many Different Kinds of Sales are There?
- Should I Consult a Lawyer When Negotiating or Entering Into a Sales Agreement?
How Can I Be Sure a Valid Agreement for the Sale of Goods Has Been Made?
There are four rules for forming a valid agreement for the sale of goods:
- There must be a buyer and a seller
- There must be a form of payment
- The parties must agree on the price
- The contract must be entered into voluntarily by both parties. If one party has been coerced or tricked into the sale, it is not a valid agreement
What Are the Elements in a Sale of Goods Agreement?
Elements in a sale of goods agreement include:
- The names of the buyer(s) and seller(s)
- Identification of what the property is. The more detailed the description the better, so that it is clear what is being sold and bought
- The location of the sale (city, state)
- A promise by the seller that they have the right to sell the property, and that no other party has a legal interest in it
- A statement concerning any warranty that is being made, or a statement that the property is being sold “as is”
- A statement that the buyer has had the chance to see the property and accepts its condition as is (unless a warranty is made by the seller)
- A statement indicating whether any sales tax is owed to any governmental body, and who will pay it (for example, sales tax is required when a vehicle is sold)
- A statement indicating which state’s laws will govern the agreement if there are any disputes in the future
Can Anyone Be a Buyer or Seller?
There are persons who cannot be a party to an agreement for the sale of goods:
- Persons who have acquired special knowledge about the property (a secret, for example) because of their connection with the owner, such as being employed by them or being their attorney. This includes trustees, guardians, assignees of insolvents, and insolvents.
- Persons who lack the general mental or intellectual capacity to enter into contracts. If a person is not able to understand their responsibilities and rights under the agreement, and to understand all of its terms, then they lack the mental capacity to form an agreement.
- Persons who lack the capacity to enter into contracts because they are minors. In some states minors are allowed to enter into valid contracts to buy basic necessities such as clothing, food, and housing (an apartment lease, for example)
- Someone who is under the influence of drugs or alcohol is generally believed to lack capacity to enter into a sales agreement. This is because many courts have found that a sober party shouldn’t take advantage of an intoxicated person. Getting out of a contract by saying you were drunk at the time is difficult, however. If there is a lawsuit over the contract, how will you prove how drunk or high you were? Most important, how will you prove that your use of drugs or alcohol was so egregious that you lacked the capacity to enter into a contract?
Contracts made with people who don’t have legal capacity aren’t void, they are “voidable.” Since they didn’t have the capacity to enter into the agreement, the person without capacity does not have to perform their obligations. However, if the incapacitated person wants the contract to be upheld, the other party must comply with their responsibilities.
As an example, if Bob and Jill signed a contract for Bob to lease an apartment from Jill, but Bob did not have capacity to enter into the contract because at the time he signed it he was completely intoxicated, Jill cannot oblige Bob to take the apartment, but Bob can enforce the contract and compel Jill to honor the lease.
If the court does void a contract, it will attempt to put all parties back in the position they were in before the agreement, which may involve returning property or money when feasible.
Are There any Criteria for Setting Prices in a Contract?
In setting a price for the parties to mutually agree upon, three criteria must exist:
- The price must be serious (the seller must intend on actually collecting payment)
- The price must be definite and certain – it must be clear what the price is
- The price must be in terms of money
Does the Sale of Goods Agreement Have to Be in Writing?
To be enforceable, the sales agreement must be in writing if the “statute of frauds” requires it.
The statute of frauds requires that certain contracts (such as contracts to get married) have to be in writing. In the case of sales agreements, three provisions of the statute of frauds apply:
- Contracts for the sale of goods totalling $500.00 or more must be in writing
- Contracts that cannot be performed within one year must be in writing (for example, an agreement to buy someone’s car next year)
- Contracts for real estate must be in writing
How Many Different Kinds of Sales are There?
There are a few different kinds of sales you should be aware of. A sale may be one or more of these types:
- Absolute sale – An outright sale which is not dependent on anything else happening (it is not dependent on any conditions)
- Conditional sale – A conditional sales agreement is a financing arrangement where a buyer takes possession of an item (asset), but the asset’s title and right of repossession remain with the seller until the buyer pays the full purchase price.
- Voluntary sale – A sale made by the seller without any force, coercion or fraud
- Forced sale – A sale by the seller forced by law. Normally when a seller breaches (breaks) a sales agreement, they are required to pay the buyer money damages and the sale is essentially canceled. In certain circumstances a court will instead order that the sale go forward and the contract be enforced. This occurs when the object being sold is unique and so simply returning the buyer’s money, or substituting another item, won’t put the buyer in the position that they would have been if the seller hadn’t breached the contract. The most common type of property that this applies to is real estate.
- Public sale – A sale of property at auction. The sale can be either forced (such as when a bank repossesses a house and puts it up for auction) or voluntary
- Private sale – A sale made between private parties without auction
Should I Consult a Lawyer When Negotiating or Entering Into a Sales Agreement?
Sales agreement negotiations, especially in the context of important financial contracts, can be complicated and difficult. If the piece of property matters to you and you want the best possible deal, negotiations for the terms of the sale should be handled by someone familiar with the field. A contract lawyer can assist you with negotiations so that your needs and requirements will be met.
Once a basic agreement is reached, the terms must be written down. The sales agreement should be thorough, covering all relevant possibilities that may arise, and should be drafted so that it is fully enforceable. A contract lawyer can help you with drafting the contract, or reviewing one if it has already been drafted by the other party. A lawyer will be sure to explain to you the responsibilities that both you and the other party must fulfill.
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