Description

Sale of Goods Agreement (Pro-Buyer, Short Form)

Summary

This is a short form Sale of Goods Agreement under Article 2 of the Uniform Commercial Code (UCC).  The authors have drafted this sale of goods agreement in the buyer’s favor.

Sale and supply agreements vary in length and complexity depending on a variety of factors, such as:

• The relationship between the parties.
• The size of the deal.
• Whether the goods are off-the-shelf or custom-made.
• The creditworthiness of the buyer.
• The allocation of warranty and other responsibilities.

Details

This Agreement is:

• A short-form Sale or Supply Agreement for the sale of goods under the Uniform Commercial Code (UCC).
• Drafted from the perspective of the buyer purchasing off-the-shelf goods.

Assumptions

This Sale of Goods Agreement assumes the following:

The agreement is not intended to be a master agreement.

• This Agreement covers a single sales transaction only. Therefore, if the buyer purchases additional goods from the seller, a new and separate purchase governs each subsequent purchase.

The buyer does not present its purchase order.

• This document contemplates that the buyer and the seller will negotiate and incorporate all of the terms and conditions of the transaction into this document. This helps the parties to avoid the battle of forms.

The seller is a merchant selling durable, off-the-shelf goods.

• The seller is a merchant in the business of manufacturing or selling durable goods of the type that are sold under the agreement. Therefore, the parties must revise this Agreement Document if the seller is selling nondurable (consumable) products. Furthermore, this Agreement does not include certain terms and conditions that traditionally accompany a sale of custom-made goods. If the buyer is purchasing custom-made goods, the parties should consider also entering into a manufacturing supply agreement.

The agreement is based on the model UCC.

• Agreements for the sale of goods are typically governed by UCC Article 2, as enacted by the relevant state whose law applies to the transaction. All states (except Louisiana), the District of Columbia, the Commonwealth of Puerto Rico, Guam and the US Virgin Islands have enacted some form of UCC Article 2. Unless noted otherwise, all references to the UCC in the drafting notes to this document refer to the pre-2003 model code. Parties should consult the version of the UCC enacted in the state whose law applies to the transaction. This version of the UCC may be different than the model code.

The buyer purchases the goods without accompanying services.

• If the buyer purchases or may purchase services together with the goods, the parties must revise this Agreement to address services-specific issues.

Standard reseller and distributor agreement-specific terms and conditions are not appropriate for use under this transaction.

• Although parties can use this Agreement to purchase goods for resale, certain considerations for purchase for resale are beyond the scope of this resource (for example, advertising and marketing terms and conditions). If the buyer is purchasing goods for resale, the parties should consider also entering into either:
  • a reseller agreement; or
  • a distribution agreement.

The parties to the agreement are US entities and the transaction takes place in the US.

• If either party organizes in, operates in, or any part of the transaction takes place in a foreign jurisdiction, the parties may need to modify these terms to comply with applicable laws in the relevant foreign jurisdiction. For example, US companies that enter into international sales contracts with companies located in countries that have ratified the United Nations Convention on Contracts for the International Sale of Goods (CISG) must:
  • consider the differences between state UCC law and the CISG; and
  • select the appropriate law to govern the sales contract.

If the seller is a foreign entity or the buyer believes that the seller’s export activities could cause the buyer to suffer liability, then the buyer should consider adding international and export-specific representations and warranties and covenants.

The buyer does not have the right to resell the goods or incorporate the goods into other products that they are reselling to a government entity.

• In the US, the government regulates contracts with the government more heavily than non-government contracts. US government procurement laws and regulations cover some subcontracting agreements, which may indirectly impact the relationship between the buyer and the seller. Therefore, if the parties agree to give the buyer the right to resell the goods or incorporate the goods into other products that are to be resold to a government entity, the parties may have to revise this agreement.

The buyer purchases the goods without any third-party imposed requirements or services.

• The goods may contain or be contained in, be comprised of (in whole or in part) or be packaged together with products manufactured by a third party. This Agreement assumes that the buyer purchases the goods without third-party manufacturer-imposed:
  • requirements (for example, return requirements);
  • accompanying third-party manufacturer services; or
  • warranties.

The parties must revise the Agreement if third-party manufacturers imposed requirements on the goods. The parties must also revise the Agreement if the goods are covered by a services agreement or warranties.

The Agreement excludes a trademark license.

• The parties must revise the agreement to include a trademark license from the seller if the buyer incorporates the goods into the buyer’s products and the buyer wants to:
  • display any of the seller’s trademarks on the buyer’s products; or
  • use any of the seller’s trademarks in any advertising, marketing or other materials.

There are a single seller and a single buyer.

• The parties should revise this agreement if there are additional sellers or buyers. For example, multiple sellers or buyers must determine whether their obligations are joint, several, or joint and several and amend the agreement accordingly.

The parties use these terms in a business-to-business transaction.

• The parties should not use this Agreement in a consumer contract or a government contract. Due to the fact that consumer and government contracts may involve legal and regulatory requirements and practical considerations that are beyond the scope of this resource parties should not use this agreement in a consumer or government contract.

These terms are not industry-specific.

• This Agreement does not account for any industry-specific laws, rules, or regulations that may apply to certain transactions, products, or services.