A sale of goods is a legal phrase that is used to describe a transaction for merchandise between a seller and a buyer. A typical sale of goods transaction involves a buyer, a seller, and sometimes a delivery service. In many situations, the buyer and seller enter into a sale of goods contract.

If there is no contract involved in the merchandise transaction, the sale of goods is governed by a default set of rules as explained in the Uniform Commercial Code. A written sale of goods contract may be required by the Statute of Frauds when high value merchandise or repeated transactions are involved in the sale.

A sale of goods may involve any type of goods, including food, clothing, books, and other items.    

What is a Risk of Loss in a Sale of Goods?

In a sale of goods transaction, a seller will either deliver the goods to a buyer directly, or a seller will ship the goods to the buyer by using a delivery carrier.

While a shipment of goods is in transit between the seller and the buyer, sometimes there is a chance that the goods may be damaged, destroyed, spoiled or lost. The chance that the goods may be damaged or destroyed is called the risk of loss. The loss in a sale of goods refers to the value of the goods that were damaged or destroyed.

Who is Responsible for the Damaged Goods?

Depending on the circumstances, the seller, the buyer or the delivery carrier may be responsible for the value of the damaged goods. If there is no contract involved in the sale of goods, a civil court judge may determine who is responsible for the damaged goods if a lawsuit is filed.

Generally, a sale of goods involves a sale of goods contract. The terms of the contract usually explain who is responsible for the value of the damaged goods. This section of a contract typically describes the party who bears the risk of the loss in the sale of the goods.  

In some cases, a sale of goods contract only involves a buyer and a seller. In the beginning of a transaction of this type, the seller is usually responsible for the value of the damaged goods. This is because only the seller has been in possession of the goods. The responsibility for the goods will generally pass from the seller to the buyer after the seller has successfully delivered the goods directly to the buyer.

In other cases, a sale of goods contract involves a buyer, a seller, and a delivery carrier. This occurs when the sale of goods involves a shipment or a mailing. In a transaction that involves a delivery carrier, the responsibility for the goods is sometimes transferred to the buyer as soon as the seller gives possession of the goods to the delivery carrier. In other situations, the seller may continue to be responsible for the goods after the merchandise has been transferred to the delivery carrier. 

What’s the Difference Between a Shipment Contract and a Destination Contract?

In most cases, drafting a sale of goods contract involves terms that make it either a shipment contract or a destination contract.

In a shipment contract for a sale of goods, the buyer is responsible for any damages to the goods while the merchandise is in transit from the seller to the buyer. This means that the buyer cannot demand that the seller reimburse the buyer for the value of any damaged goods. However, there is an exception to this rule. If the goods were damaged before the seller shipped them, then the buyer may be able to recover the loss of the value of the goods.

If a buyer and a seller have a destination contract for the sale of the goods, the seller is responsible for any damages to the goods until the merchandise reaches the buyer’s home or business. This means that the buyer may be able to recover the value of the damaged goods if the goods were damaged before the seller shipped the merchandise, or if the goods were damaged while in the possession of the delivery carrier.

Do I Need a Lawyer for an Issue with a Sale of Goods Transaction?

A sale of goods transaction becomes complicated when a large amount of goods is involved, or if the value of the goods is unusually high. Complications also are likely to arise in a sale of goods transaction if the goods are for perishable items such as raw fruit, vegetables, or meat.

If you are planning on buying or selling goods, it may be difficult to determine who is responsible for any damaged, destroyed, or lost goods. A business lawyer can help you determine your rights in a sale of goods transaction and can help you decide which type of sale of goods contract is best for your situation.