A sale of goods contract specifies the agreement between two parties when purchasing or selling goods. A sale of goods contract is formed when one party offers to sell or buy goods and the other party accepts the offer. Sale of goods contracts can be in standard form (no negotiation of terms) or completely open (all terms can be negotiated).
In a sale of goods contract, both the seller and the buyer have certain duties they must fulfill before a sale of goods contract is considered adequately performed. If both parties agree, conditions can be created in the contract to nullify some of the duties.
A seller of goods has certain duties to fulfill before a sale of goods contract is considered adequately performed. Such duties include:
- Tender of delivery – When the seller delivers the contracted goods, the delivery must be done in a reasonable time, place, and manner.
- Perfect tender rule – A sale of goods contract will often describe the goods in great detail. For example, a buyer of fruit might require the fruit to be of a certain size, color, ripeness, and so on. The seller must provide goods in the exact manner that the buyer wishes to purchase them. Buyers have the right to reject a delivery of goods if any conditions agreed upon are not met.
- Assurance and cooperation – There are times when the buyer may question whether the seller will deliver as promised. If the buyer raises such questions, the seller has an obligation to assure the buyer that the delivery will be completed. Otherwise, the buyer can sue the seller for breach of contract.
A buyer of goods also has certain duties to fulfill to adequately perform a sale of goods contract. However, only one duty is important: payment. Unless otherwise agreed to, the buyer must make payment once the seller makes the delivery of goods. The buyer does not have to pay if the goods do not satisfy the buyer’s conditions.
The Uniform Commercial Code (UCC) governs sale of goods contracts. Transactions falling under the UCC (i.e. sale of goods contracts) do not follow typical contract law. There are attorneys that specialize in negotiating, drafting, and reviewing sale of goods or "UCC" contracts. Contact a business lawyer specializing in UCC law if you are interested in getting help drafting a sale of goods contract.