What is a Sale of Goods Contract?

A Sale of Goods Contract is a legally binding agreement between two parties, where one party (seller) agrees to sell goods to another (buyer) in exchange for money. This type of contract covers the responsibility of both seller and buyers from the beginning of the agreement to the payment methods, delivery stages, and after-sale services like warranties. Sales contracts also contain detailed descriptions of the goods such as name, the quantity being sold, and the price.

This contract also helps them to prepare solutions for common problems that may occur during the agreement. Many unforeseen things like damages or delays can happen in the process of selling and delivering goods. Writing a great sales contract for goods helps parties to have peace of mind by clearly planning out everything for a smooth exchange. This way the sellers know exactly when and how they receive the payment, and the buyers know how, when, and where the goods are delivered.

🧠 Did you Know? If you’re not using currencies in your agreement, and exchange goods for goods, or goods for services, your contract is considered as the barter agreement.

What Should You Include in a Sale of Goods Contract?

1. Description of Goods 📦

The description of goods is one of the most important parts of this sales agreement. You want to be very discreet about the details. Whether it’s the product specifications, the quantity, or the expected quality, getting specific here helps prevent misunderstandings.

Make sure you include at least the following details:

• Product code and name
• Description and technical specifications
• Quantity
• Unit price
• Total price

Since the list of goods may be exhaustive, in some cases parties add the goods’ details as a separate section as an appendix or attachment to the contract.

❗ Important: If key elements, like price or delivery terms, are missing, the contract may still be enforceable depending on the jurisdiction and the clarity of the remaining terms.

2. Delivery Terms & Process 🚚

In the delivery terms section, you define how, where, and when the delivery takes place and what happens next. It should include the following details:

• Delivery address: physical address, warehouse location, or any other designated spot
• Delivery time: if the delivery might happen in stages, this should be outlined as well. Don’t forget to add details like business hours for accepting deliveries.
• Transfer of Risk: Add it if any risk exists when delivering the product. The transfer of risk could be upon shipment, delivery, or acceptance, depending on what the parties agree to.
• Inspection and Acceptance of Goods: This clause allows buyers to have a specified time frame and method for inspecting the goods once they’re delivered. It includes how the inspections should be done (e.g., visual check, functional testing). The acceptance section formally defines how the buyer accepts the goods. For example, if the buyer finds an issue during the inspection stage, there should be steps for rejection, repair, or replacement.
• Returns and Rejections: In case the buyer did not find the goods satisfactory for acceptance, this section helps them provide details on how returns or rejections works. For example, this may include deadlines for notifying the seller, who covers shipping costs, and if a replacement is not possible.

3. Payment Terms and Methods 💵

No sales contract is complete without payment terms. When writing this section, make sure you include not just the amount and currency, but also the method and options—by invoice, on schedule, wire transfer, with downpayment, installments, etc.

4. Warranties and Guarantees 🔒

It’s always a good idea to talk about any promises the seller is making about the goods, like guarantees on performance or product warranties for defects.

5. Termination and Cancellation ❌

Lastly, it’s important to have a plan for what happens if either side needs to back out of the deal. The termination clause should explain how to end the contract, reject goods, or go through any formal review. It helps keep things organized and reduces the chances of unnecessary conflict if something doesn’t go as planned.

6. Other Essential Clauses in a Sales Contract 📑

Here are some other useful clauses that you can add to your contracts for sales of goods:

• Insurance
• Tax and Duties
• Limitations of Liability
• Dispute Resolution
• Governing Law and Jurisdiction
• Indemnification Provisions

What About International Sale of Goods Contracts?

Sales contracts can get a bit complex when it comes to international sales and purchasing goods. Depending on the location and rules applied, you want to clarify a few points in your contract clauses contract, including:

Governing Law and Jurisdiction ⚖️

Clearly specify which country’s laws will apply and where disputes will be resolved. Many contracts use the **United Nations Convention on Contracts for the International Sale of Goods (CISG**) as a common legal framework.

Example: A contract between a U.S. seller and a French buyer states that disputes will be settled under French law and handled in Paris courts. Alternatively, both parties agree to apply the CISG rules for standardized legal interpretation.

Duties, Taxes, and Import Regulations 💼

You need to mention which party handles duties, tariffs, and import fees for international sales.

Incoterms® Rules 🌐

Incoterms, or International Commercial Terms, are a standardized set of rules developed by the International Chamber of Commerce (ICC). These rules help you decide tasks like shipping costs, insurance, customs duties, and the point at which the risk of loss or damage transfers from the seller to the buyer.

Example: The parties agree to use “FOB (Free on Board)” shipping terms in which the seller covers costs until the goods are loaded on the ship, and the buyer assumes responsibility once the goods are on board.

Export Controls and Sanctions

You need to confirm compliance with export controls and trade sanctions, especially for restricted or dual-use goods.

Example: The seller confirms that the goods being sold aren’t subject to U.S. export restrictions or international sanctions lists to ensure lawful transactions.

Can you Sign a Contract for the Sale of Future Goods?

Yes, you can sign a contract for the sale of future goods. Usually, for that purpose, the parties use a contract known as an Agreement to Sell—when the seller actually promises the future sale based on certain conditions.

However, if you structure the Sales Contract for Goods in a way that the transfer of ownership is set to occur in the future, it has a similar functionality of an Agreement to Sell.

What Happens in Case of Breach of Contract for Sale of Goods?

Depending on who breaches the contract for the sale of goods, there are usually three different scenarios to deal with, each with unique legal remedies for breach:

1. Breach by Seller

If the seller fails to deliver the goods as agreed or delivers them with delays or damages, the buyer can take the following actions:

• Right to Claim Damages: The buyer can claim compensation for losses caused by the seller’s breach. For example, if the buyer had to purchase the same goods from another seller at a higher price, the seller may be required to cover the price difference.
• Right to Reject Goods: If the goods delivered are not in accordance with the contract (e.g., incorrect quality or quantity), the buyer can reject them.
• Right to Specific Performance: In some cases, the buyer might request that the seller fulfill the contract by delivering the specific goods agreed upon, rather than just providing a monetary remedy.

2. Breach by Buyer

If the buyer does not make payment on time or doesn’t accept the goods after the seller has fulfilled their part, the seller has several options:

• Right to Claim Damages: The seller can sue for damages to cover any loss due to the buyer’s failure to pay or accept the goods. This could include the cost of storing the goods, loss of profit, or the costs of reselling the goods.
• Right to Cancel the Contract: The seller may have the right to cancel the contract if the buyer has not paid or accepted the goods in a reasonable time frame.
• Right to Reclaim Goods: In some cases, the seller can reclaim the goods if they have not been fully paid for, depending on the terms of the contract.

3. General Breach of Contract:

Sometimes, it’s impossible to hold a party responsible for breaches. If it is the case, the remedies are:

• Specific Performance: In some cases, the court may order the breaching party to perform their obligations as per the contract.
• Contract Cancellation or Rescission: Either party can ask to cancel the contract (rescind it) if the breach is significant enough.
• Price Reduction: If the goods delivered are defective or not as agreed, the buyer may be entitled to a reduction in the price, rather than rejecting the goods.

Sale of Goods Contract Template

With our comprehensive Sales Contract for Goods, you can easily draft a well-written binding contract in no time. This template has all the necessary legal clauses and details and you can easily modify it the way it works best for you.

Give it a try!

Sales Contract (Goods)

A Sale of Goods Contract is a formal agreement between a buyer and seller, where the seller agrees to transfer goods in exchange for payment. It has the following sections: parties' responsibilities, product descriptions, delivery details, and payment terms. It can also cover issues like warranties, returns, and breach of contract to make the process smoother and more predictable.

Using our sale of goods contract template, you can easily draft a fully functional and binding agreement in just a few minutes. It’s comprehensive, easy to follow, and covers all essential points when it comes to buying and selling goods.

contract Use template

FAQs

What happens if the buyer doesn’t pay on time?

If the buyer fails to pay as agreed, the seller may have the right to terminate the contract, charge late fees, or take legal action to recover the debt.

Can a Sale of Goods Contract include a refund policy?

Yes, it’s common for a Sale of Goods Contract to include terms regarding refunds, returns, or exchanges, especially for defective or unsatisfactory goods.

What is the difference between a Sale of Goods Contract and a Supply Agreement?

A Sale of Goods Contract focuses specifically on transferring ownership of goods, while a Supply Agreement outlines ongoing delivery or provision of goods over a period of time.

Can you transfer a Sale of Goods Contract to another party?

Yes, a Sale of Goods Contract can sometimes be assigned to another party, but the seller’s consent may be required, depending on the terms.