Description

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

Summary

This is a short form Sale of Goods Agreement under Article 2 of the Uniform Commercial Code (UCC).  This sale of goods agreement is drafted in the seller’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 reliability of the seller.
• The allocation of warranty and other responsibilities.

Details

This Sale of Goods 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 seller of durable 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 seller sells additional goods to the buyer, a new and separate contract governs each subsequent purchase.

The buyer does not present its purchase order, and the seller does not respond with its sales confirmation.

• 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. Once signed, the seller must sell and buyer must buy the goods. This is required in order to help 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 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 seller is selling custom-made goods, the parties should also consider entering into a manufacturing supply agreement.

This 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, which may be different than the model code.

The seller sells the goods without accompanying services.

• If the seller sells or may sell 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 are beyond the scope of this resource. Additionally, if the buyer is purchasing goods for resale, the parties should consider 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.

• The parties may need to modify the terms to comply with applicable laws in the relevant foreign jurisdiction if any party organizes in, operates in, or any part of the transaction takes place in a foreign jurisdiction. For example, US companies that enter into international sales contracts with companies located in any of the other 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. The buyer cannot incorporate the goods into other products that are resold 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, the parties may have to revise the Agreement if they agree to give the buyer the right to resell the goods or incorporate the goods into other products that the buyer is reselling to a government entity.

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. The parties must revise the Agreement if a third-party manufacturer imposes requirements on the goods. The parties must also revise the Agreement if a services agreement or warranties cover the goods. 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 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.

Parties use these terms in a business-to-business transaction.

• Parties should not use this Agreement in a consumer contract. Due to the fact that consumer 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 contract.

These terms are not industry-specific.

• This Agreement does not account for any industry-specific federal or state laws, rules, or regulations that may apply to certain transactions, products, or services. Therefore, the parties must revise the agreement if they wish to make this Agreement industry-specific.