A sales contract is a contract for the sale and purchase of consumer goods. The term “Sales Contract” typically refers to the sale of goods that are ready for introduction into the general market, rather than the sale of services. Such contracts often involve the sale of products at wholesale quantities and prices.
Sales contracts are governed by state and federal contract laws. Laws covering the sale of goods are unique in that they often deal with the standards for professional conduct required of merchants (i.e., persons who specialize in the sale of a certain product). Merchants have more experience and knowledge and therefore are held to different standards than normal citizens who aren’t engaged in business.
Thus, the laws governing sales contracts for merchants include special exceptions for various circumstances, for example with regards to risk of loss for the seller, and offer/acceptance provisions. Merchant contract laws are codified in the Uniform Commercial Code (UCC).
Sales contracts can cover a broad range of business agreements. In order to avoid violations and miscommunications, a sales contract between the seller and the buyer should be as clear and specific as possible. A clearly-written contract should include at least the following information:
- The parties to the contract
- The type of product being sold
- The date of the sale
- Price and quantity of the goods
- Method and terms of payment
- Delivery and shipping terms (if applicable)
In addition, the sales contract can contain additional information regarding the relationship between buyer and seller. For instance, if two merchants have a long history of making the same transaction every year, the contract may state terms regarding the renewal of the contract.
A common example of a sales contract is where a wholesale Halloween clothing producer creates a contract with a retailer for the bulk sale of holiday t-shirts. The retailer may purchase large quantities of the wholesale product every fall, with the contract being renewed every year or every few years. An interested consumer can also create a similar contract with the retailer.
Land and real estate are considered a special type of consumer product. In general, the sale of real property is subject to the statute of frauds, which means that all land sales contracts must be in writing. If a land sale contract isn’t in writing, it generally won’t be considered valid by the courts.
Also, the contract should describe the land and/or property through boundaries and measurements, rather than by landmarks. The property should be identifiable based on the description contained in the contract alone.
There are various remedies for breaches of sales contracts. The most common is that the court may issue a monetary damages award for the non-breaching party, to compensate them for losses directly flowing from the breach.
Another common remedy is for the court to issue an injunction requiring the breaching party to perform their contract duty. For example, the injunction may require a non-paying party to transfer payment to the other party, or it may require one party to deliver goods that weren’t shipped.
Sales contracts can sometimes be subject to various legal exceptions, especially if one or both of the parties are classified as merchants. You may wish to contact an experienced contract attorney in your area if you need help drafting or reviewing a sales contract. Your attorney can also provide you with expert legal representation in a court of law if you need to file a civil lawsuit for breach of contract.