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Sample Sales Contract

This legal document is a template for the sale of goods. A written sales contract helps you and the other party to better understand the terms of the agreement. A written document also minimizes the chances of a dispute later on.

This contract template is a sample. It's only a starting point and a guide to help you and your attorney create a sales contract relevant to your business interactions.

See FindLaw's Contract Law and Drafting Contracts sections for more articles and resources.

Contract Basics

A contract is a legally enforceable agreement between two or more parties that creates an obligation to do or not do certain things. The basic elements of a binding contract are offer, acceptance, and consideration.

A sale of goods agreement typically involves a seller who agrees to sell goods and a buyer who agrees to buy those goods for a certain price.

Offer and acceptance are self-explanatory, but “consideration" is probably not. Consideration is an exchange of something of value. It doesn't always have to be money. Consideration can be a promise by the other party to do or not do something.

Oral contracts are valid. But some contracts must be in writing, such as real estate contracts and contracts for the sale of goods over $500. For example, California law explicitly states that contracts for the sale of goods costing more than $500 are not enforceable unless they're in writing.

The "Statute of Frauds," an English law from 1677, provides the basis for current written contract requirements. It's been adopted by the states as part of the Uniform Commercial Code (UCC). The UCC is a comprehensive set of laws governing commercial transactions in the United States. The UCC covers various types of business activities, such as sales, leases, secured transactions, and more. It provides standardized rules across state lines that businesses can depend upon.

Contracts are usually governed by and enforced by the state where the agreement was made.

Apart from the legal requirement, a sale of goods agreement should be in written form to avoid ambiguity and disputes. A written sale of goods contract offers a clear record of the agreed-upon terms.

CONTRACT FOR THE SALE OF GOODS

A. Company Names

Paragraph 1. _______________________ , hereinafter referred to as Seller, and _____________________, hereinafter referred to as Buyer, hereby agree to the following terms.

B. Identities of the Parties

Paragraph 2. Seller, whose business address is _____________________, in the city of _______________, state of _________________________, is in the business of ___________________________. Buyer, whose business address is ____________________, in the city of _________________, state of _________________________, is in the business of ____________________________.

C. Description of the Goods

Paragraph 3. Seller agrees to transfer and deliver to Buyer, on or before ________________________ [the agreed date of delivery], the below-described goods:

_______________________________________________________________

_______________________________________________________________

_______________________________________________________________

_______________________________________________________________

D. Purchase Price and Payment Terms

Paragraph 4. ________________ is the total purchase price, inclusive of any applicable sales taxes. Buyer agrees to accept the goods and pay for them according to the payment terms further set out below.

Paragraph 5. Buyer agrees to pay for the goods:

In full upon receipt

In installments, as billed by Seller, and subject to the separate installment sale contract of __________________ [date] between Seller and Buyer. Late payments could be subject to interest or penalties.

Half upon receipt, with the remainder due within 30 days of delivery of the goods.

E. Buyer's Rights and Obligations

Paragraph 6. Goods are deemed received by Buyer upon delivery to Buyer's address as set forth above.

Paragraph 7. Buyer has the right to examine the goods upon receipt and has ____ business days in which to notify seller of any claim for damages based on the condition, grade, or quality of the goods, especially in cases of defective goods or poor workmanship. Any claims must be made within the specified time frame as detailed in the provision of this agreement.

Paragraph 8. Such written notice must specify in detail the particulars of the claim. Failure to provide such notice within the required time period constitutes irrevocable acceptance of the goods.

F. Seller's Obligations

Paragraph 9. Until received by Buyer, all risk of loss to the above-described goods is borne by Seller.

G. Warranties and Bill of Sale

Paragraph 10. Seller warrants that the goods are free from any and all security interests, liens, and encumbrances. The Seller will provide a bill of sale to the Buyer on the closing date. Any disclaimer related to the particular purpose of the goods should be clearly stated.

H. Dispute Resolution

Paragraph 11. In the event of any dispute, claim, question, or disagreement arising from or relating to this agreement or an alleged breach, the parties agree to use their best efforts to settle the matter.

Paragraph 12. If the parties do not reach a solution within 60 days, then, upon notice by either party to the other, disputes, claims, questions, or disagreements shall be resolved by binding arbitration. Arbitration will be conducted by [name of the arbitration institution] in accordance with its rules. Judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

Paragraph 13. A single arbitrator will conduct such arbitration. The arbitrator shall be selected by joint agreement of the parties. If the parties cannot agree on an arbitrator within thirty (30) days of the request for arbitration, the parties shall each select an arbitrator affiliated with [name of the arbitration institution]. The arbitrators will then select an arbitrator to resolve the dispute. The written decision of the arbitrator shall be final and binding on the parties.

Paragraph 14. Any judgment on the award rendered by the arbitrator may be entered in any court of competent jurisdiction.

Paragraph 15. The parties shall be responsible for their own attorneys' fees.

Paragraph 16. Nothwithstanding the above, each party retains the right to go to court to seek injunctive or other equitable relief while awaiting the final decision from the arbitrator.

I. Force Majeure

Paragraph 17. Neither party shall be liable for any failure to perform its obligations where such failure occurs because of events beyond the reasonable control of the party. Force majeure events are defined as:

  1. Natural Disasters: These include earthquakes, floods, hurricanes, tornados, or other severe weather events that could interrupt the production, transport, or receipt of goods.
  2. Acts of War or Terrorism: Any war, whether declared or not, civil unrest, or acts of terrorism that disrupt normal business operations could qualify as force majeure events.
  3. Pandemics or Epidemics: Widespread health crises, such as COVID-19 or other severe disease outbreaks that disrupt normal business operations and supply chains.
  4. Government Action: This could include newly imposed trade embargoes, changes in regulations, or other governmental acts that prevent the performance of the contract.
  5. Labor Strikes: Strikes, labor disputes, or work stoppages that disrupt a party's ability to fulfill the contract.
  6. Severe Economic Circumstances: This might involve drastic market changes, such as a sudden spike in the cost of essential raw materials, that would make the execution of the contract excessively burdensome or impractical.

J. Attorney's Fees

Paragraph 18. In the event of a dispute regarding this agreement, the prevailing party is entitled to recover its reasonable attorney's fees and court costs from the non-prevailing party.

K. Applicable Law

Paragraph 19. This agreement shall be governed by the governing law of the state of ____________.

L. Entire Agreement

Paragraph 20. This document constitutes the entire agreement of the parties and supersedes all prior written or verbal agreements between the parties related to the subject matter hereof. Any changes to this agreement must be through prior written consent of both parties.

M. Headings

Paragraph 21. The headings used in this agreement are for organizational purposes only and do not in any way limit or define the scope or intent of the provisions under them.

N. Agreement Date

Paragraph 22. Agreed to this _____ day of _____, in the year ____________.

By: ___________________________ Official Title: ____________________________

On behalf of ______________________________________, Seller.

O. Attestation

Paragraph 23. I certify that I am authorized to act and sign on behalf of Seller and that Seller is bound by my actions. ______ [initial]

By: ___________________________ Official Title: ____________________________

On behalf of _____________________________________, Buyer

[NOTARY STAMP HERE]

Get Legal Help With Drafting or Reviewing a Sales Contract

This article is a good guide to getting familiar with sales contracts. Getting professional legal advice when drafting or before signing a contract is always a good idea. If you need some advice on how to write a valid business contract, whether it be a purchase order or sale of goods agreement, a contract law attorney can help. They can also help if you have questions about a particular contract.

An attorney can help you understand your rights in case a force majeure event occurs or there's a need for a waiver of certain terms in the agreement. Consult an experienced business attorney to know what you're agreeing to by signing the contract.

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