What Should be in an Agreement for the Sale of Goods?
While the California Commercial Code (California’s version of the Uniform Commercial Code) may govern the sale of goods in California, where the prices for the goods exceeds $500.00, an agreement not in writing may not be enforceable. To ensure that any agreement for the purchase of your goods valued in excess of $500.00 is enforceable you should ensure that a written agreement is signed by the purchaser. Some of the terms that should be included in your agreement include:
- The complete and accurate name of the purchaser and whether the purchaser is a person, sole proprietorship, joint venture, partnership, limited liability, corporation, or some other form of business
- A complete and accurate description of the goods to be sold
- The total price and price per unit to be paid for the goods
- The date upon which the goods are to be delivered to the purchaser
- A provision detailing how the goods are to be delivered (will they be delivered to the purchaser by carrier or will the purchaser take delivery at the seller’s place of business)
- A provision describing when the risk of loss will pass, if they are to be shipped (i.e., will they be shipped “F.O.B. place of shipment” or “F.O.B. place of destination”)
- A provision describing the purchaser’s right to reject the goods sold, if any, and if not rejected, the time within which the goods will be deemed accepted
- Any warranties provided by the seller and any limitation of those warranties
- A provision describing what constitutes a breach of the contract and what the rights and/or obligations of the parties will be in the case of a breach (and what constitutes a material breach as opposed to a minor breach)
- A provision describing the remedies available to the parties in the event of a breach
- A provision stating that the person signing on behalf of an entity (other than a natural person) has the authority to act for and bind that entity (i.e., the persons holding themselves out as representing the entity in the purchase – the president, vice president, etc.)
- A provision stating that “time is of the essence” (meaning that the terms relating to when certain acts are to occur must be met promptly)
- A provision concerning who will bear the legal costs of any action brought to enforce or interpret the contract (an attorney’s fees provision)
Although all contracts for the sale of goods are different, the foregoing terms are a few of the key terms every seller should insist upon. While the failure to include any particular term may not be fatal to the enforcement of your contract, your failure to consider at least these terms may mean the difference between a profit or loss.
To ensure your agreement will be enforceable in California, you will need the services of a rising star like Michael Leonard, Esq., named “Best of the Bar” by the San Diego Business Journal in 2016. You can arrange for a consultation with Mr. Leonard to discuss creating any type of business agreement or any other business-related matter by visiting San Diego Corporate Law or by telephone at (858) 483-9200. He has the experience, knowledge and unique qualifications to ensure all of your agreements are enforceable in the California Courts.