Keep your business on top with a sale of goods agreement

Entering into a transaction for the sale of goods? Read more to see what details belong in your sale of goods agreement.

by Belle Wong, J.D.
updated May 11, 2023 ·  3min read

Whether you are buying goods for your business, or you're the seller of the goods, it's always prudent to document the sales transaction with a sale of goods agreement. Such an agreement need not be overly long or complicated, yet an effective one will contain certain basic elements.

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Contract for sale of goods

A contract for the sale of goods works for all kinds of goods. No matter what the goods are that are being bought and sold, having a sale of goods agreement in place serves to establish the obligations of both the seller of the good and the buyer of the good.

With a properly drafted sale of goods contract, both the buyer and the seller of the goods are protected. The agreement sets out in writing what each party expects from the other, and often can go a long way to reduce potential conflict in the future.

Drafting the sale of goods agreement

One effective method of drafting a sale of goods for a sales transaction you'll be entering into is to obtain a sale of goods agreement template and then customize it to reflect the specific details of your transaction. Once you have a draft of an agreement, you also may want to run it by a professional adviser to make sure you haven't left anything important out of the agreement.

As you work on drafting a sale of goods contract that will work for your situation, keep in mind the following elements you should consider including in your final document:

  • The parties to the sales transaction. Your agreement should clearly state the name and contact information of both the seller and the buyer.
  • The goods being sold. This section of the agreement provides a clear description of the goods being sold. Be as specific as possible, and include relevant information such as brand name and model number, if applicable.
  • The price of the goods. The agreement also should state the price of the goods being sold. In some documents, this is known as the "consideration" for the goods.
  • Payment terms. Payment for goods might occur at the time the agreement is signed, at the time of shipment, or after the buyer has received the goods. The terms the buyer and seller have agreed to should be set out in this payment section.
  • Delivery of the goods. Specify when the goods will be delivered from the seller to the buyer, as well as where they will be delivered. It's also a good idea to include in this section wording as to when title to the goods will pass to the buyer, as well as risk of loss. Title means ownership of the goods, and wording as to risk of loss will set out who bears the risk of loss, or damage, to the goods.
  • Warranties. The warranty section sets out the seller's warranties for the goods. For example, a seller might warrant that they have title to the goods being sold, or that the goods being sold are fit for the purpose for which they're being sold. If the goods are being sold on an "as-is" basis, that should be included in this section.
  • Limitation of liability. This section generally limits the liability of the seller. Most templates will have specific wording regarding the limitation of liability, and you should make sure that any sample wording you're using is sufficient for your needs.

One final consideration that may apply if you're the seller of the goods is the Federal Trade Commission's cooling-off rule. In some sales situations, you may be required to include wording as to your customer's cancellation rights. The cooling-off rule doesn't apply to all sales situations, so make sure you check to see if your sale of goods is a type of sale that comes under the exceptions to the FTC's cooling-off rule.

Regardless of whether you're buying the goods for yourself or your business—or you're in the business of selling goods to others—having a properly written sale of goods agreement is an effective tool for documenting your sales transactions and protecting the expectations of both the buyer and the seller.

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Belle Wong, J.D.

About the Author

Belle Wong, J.D.

Belle Wong, is a freelance writer specializing in small business, personal finance, banking, and tech/SAAS. She spends h… Read more

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of the author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.