Free Sales Agreement

A sales agreement, or sale of goods agreement, is a written document between a buyer who wants to purchase goods and a seller who owns those goods and wants to sell them.

In general, goods are something that you can use or consume that are moveable at the time of the sale, including watches, clothing, books, toys, furniture, and cars.

Table of Contents

• Types of Goods in a Contract of Sale
• Warranties in Sales Agreements
• Rights and Duties of Buyer and Seller
• When to Use a Sales Agreement

Types of Goods in a Contract of Sale

Goods are movable property that can be sold in a sales agreement. This includes things like crops or stocks, for example. Different categories of goods can significantly impact the nature of the contract:

Existing Goods

These goods physically exist when the seller and buyer sign the contract. They can be split into two subcategories:

• Specific goods – also known as ascertained goods, are specific items agreed upon by both parties at the time of the sale. For example, the buyer may buy particular equipment with a serial number.
• Unascertained goods – goods with no specific distinction. For example, a company may buy goods of the same type, such as chairs, without defining the exact style or make of the chair in the contract.

Future goods don’t exist at the time the contract is signed. Instead, the goods must be manufactured or grown before they’re supplied to the buyer. A typical example is crops that aren’t yet developed. If a company wishes to buy corn from a farmer, it can purchase the right to the future product.

Contingent goods are a type of future goods but are based on a contingency. If those conditions are met, the buyer must purchase the goods listed in the agreement. If the conditions aren’t satisfied, the buyer isn’t required to pay for the goods.

Warranties in Sales Agreements

Warranties are legally enforceable guarantees assuring the buyer that specific facts or conditions about the goods are accurate. Without a sales agreement, warranties may either apply automatically or not apply at all. Under the Uniform Commercial Code (UCC), there are two kinds of warranties — express and implied.

Express Warranties

A seller creates an express warranty when they agree to replace or repair an item if its quality or performance isn’t as promised[lt_source id=”1″].

An example is an electronics manufacturer guaranteeing a television against defects for three years. The manufacturer must replace or repair the TV when a customer discovers and reports a fault.

Although a seller can create an express warranty even when they didn’t intend to, if the sales agreement describes the goods, the customer expects the goods will match that description. In this case, an express warranty is automatically created.

Similarly, if the seller provides the buyer with a sample of the goods, an express warranty is created – the goods will conform to the sample.

Having a written agreement allows both the seller and buyer to clearly state what, if any, express warranties will apply to the goods.

Implied Warranties

An implied warranty is an unwritten promise that the goods will meet a minimum level of quality[lt_source id=”2″]. Buyers receive automatic warranties when they buy goods from a merchant. There are two implied warranties arising under the UCC:

Warranty of merchantability

A warranty of merchantability is created based on the agreement that the goods will work as expected.

For example, when a buyer purchases a bicycle for road cycling, there’s an implied warranty that the bike is suitable.

But if the buyer uses it for mountain biking, they aren’t using the bicycle for its intended purpose, and there’s no warranty of merchantability.

Warranty of fitness for a particular purpose

This particular warranty is created when:

• The seller knows what the buyer intends to use the goods for

AND

• The buyer depends on the seller to select an appropriate item.

An example is a homeowner buying paint to paint a house. Suppose a seller recommends a specific type of paint. But it turns out that color isn’t suited for homes. In this case, the seller breached the implied fitness warranty for a particular purpose.

Implied warranties don’t automatically apply if sellers exclude or modify them in a sales agreement.

Rights and Duties of Buyer and Seller

It’s essential to know the rights and duties of the buyer and seller when creating a sales agreement.

Buyer Rights and Duties

The buyer’s rights and responsibilities include the following:

• Duty to pay for goods when adequately tendered by the seller
• Duty to follow the terms of the contract
• Right to on-time tender of the goods
• Right to applicable warranties that weren’t disclaimed
• Right to the goods identified in the sales agreement

Seller Rights and Duties

The seller’s rights and duties include:

• Duty to tender correct goods identified in the contract
• Duty to tender goods at the correct time
• Duty to tender goods in appropriate condition
• Right to timely payment for goods tendered to buyer
• Right to payment in the proper amount

When to Use a Sales Agreement

You need a sales agreement if your business sells goods or services to other parties or companies. A professional sales agreement will help keep things clear and understood by both parties by detailing the terms of the sale.

You’ll want a written agreement to ensure smooth sailing until the exchange of money and goods. You and the other party will want to know what to do if there are any issues. This agreement can be used for various sales types, from small-scale purchases to large-scale contracts.

For specific sales contracts, the buyer has a statutory right to cancel the contract until midnight of the third business day after the sale. But this can only apply if the sale location is NOT the seller’s permanent place of business[lt_source id=”4″].

Here are some examples of potential sellers and buyers who would need to use this agreement.