Sale of Goods Agreement

What is a sale of goods agreement?

A sale of goods agreement is a legal agreement that sets out terms of transferring goods from one party to another in exchange for payment.

There is no required format or list of clauses parties have to include in the text of a sale of goods agreement. The final wording largely depends on the purpose of the transaction, types of goods, and other factors. However, there is a list of clauses without which a sales contract cannot become a complete legal document:

full details of the parties involved (e.g., name, address, contact details);

• description of the goods;
• purchase price, payment terms, and methods;
• delivery terms and conditions;
• parties’ warranties and representations;
• force majeure clause;
• dispute resolution and applicable law clauses.

The parties involved in a sale of goods agreement template are a seller and a buyer. A seller is an owner of goods who held the title and could be an individual, organization, or business. A buyer is a person who wishes to purchase the goods in exchange for agreed consideration.

This document could be helpful for various sale-purchase transactions between individuals or businesses. A contract for the sale of goods template is suitable for the purchase of various types of tangible goods. This document, however, cannot be used for the purchase of real estate (e.g., apartment, house), land, or a farm.

How to draft a sale of goods agreement template

A properly drafted sale of goods agreement template ensures clarity, enforceability, and reduced risk. We would recommend including the clauses listed below:

Description of Goods

The inclusion of the description of goods is a must-have for every sale of goods agreement. The text of the agreement shall include:

• type and model;
• quantity;
• quality; and
• any other identifying characteristics, etc.

Delivery Terms

A well-drafted sale of goods agreement template must provide when the goods shall be delivered to the buyer. Therefore, this clause must include:

• Delivery Location. The parties may select to deliver goods to a buyer’s, seller’s, or any other agreed address.
• Delivery Timeline. If it is a delivery of one good, the parties may select a specific date when the delivery takes place. If, however, there are several goods to be delivered in several shipments, then a separate delivery schedule should be provided.
• Risk of Loss. Every sale of goods agreement sample has to define a person responsible for bearing a risk in case of the loss or damage of goods. In particular, parties must define from which particular moment that risk is transferred from a seller to a buyer. The parties have several options to pick up from: (1) once the goods are shipped to a buyer; (2) once a buyer pays the full price for the goods; (3) once a buyer receives goods in their physical possession.

Payment Terms

The key element of a sale of goods agreement template is payment terms. This section of the document shall define how much, when, and how a seller should be paid, in particular:

• Purchase Price. If a sale-purchase of one good takes place, then parties have to define a fixed amount to be paid. If, however, a sale-purchase of several goods takes place, then the parties have several options to pick from. The first option is to set up an overall price for all goods. The second option is to set up a price per shipping (if a seller plans to deliver goods in several installments).
• Payment Date. Every contract for sale of goods template must specify the due dates. A buyer can pay for goods in full: (1) once the goods are shipped; (2) once the goods are in the buyer’s physical possession; or (3) once the goods are delivered to the indicated address, etc.
• Acceptable Payment Methods. The contract shall lay out the list of all acceptable payment methods a buyer can use to pay for the goods. Those methods may include usage of debit or credit cards, PayPal, cash transfer, etc.
• Late Charges. For commercial sale of goods agreements, it is common to include late fees for a seller in case of a payment delay. Late fees may have various forms, including a fixed one-time payment, a fixed sum for each day or hour of delay, etc.

Force Majeure

Inclusion of a force majeure clause in the text of a sale of goods agreement sample is a must. The delivery of physical goods and commodities could be easily affected by force majeure events, including labor strikes, natural disasters, social unrest, etc.

Therefore, the text of the agreement must define a grace period within which an affected party shall not be responsible for failure to perform their duties. In practice, such a period usually lasts between 14 and 60 calendar days. If, upon the given grace period, an affected party still cannot continue performance of the agreement, another party should have a right to end the contract immediately.

Inspection of Goods

A solid sale of goods agreement template must define how a buyer can inspect and examine goods upon delivery. Examination of delivered goods is essential to ensure their quality and fitness with the description provided in the original contract.

The terms and conditions for the inspection of goods differ depending on the number of goods to be delivered, the number of shipments, etc. However, any sale of goods agreement template has to address the following important considerations:

• Duration of Inspection. A buyer should have a defined timeframe for the performance of the goods’ inspection. The parties are flexible to choose any duration from several days to a few months depending on the number of delivered items or their type.
• Grounds for Rejection. The text of the document must identify the procedure a buyer shall follow once one or several goods has a defect or damage. In that case the parties may agree either to replace them, return them back, or reduce the purchase price.
• Acceptance of Goods. The text of a contract shall mention that if, after the expiration of the inspection period, a buyer does not notify a seller about any defects, the goods shall be considered to be accepted by the buyer.

How to customize a sale contract at FasterDraft?

To get a fully customized legal document template, follow a few easy steps below:

1. Click the “Create Document” button.
2. Answer simple questions in the form.
3. Select a template’s format—sale of goods agreement PDF or Word.
4. Make a payment.
5. Download and use a customized sale of goods agreement.