Draft Sale of Goods Agreement

What a good one includes

• A precise and unambiguous description of the goods being sold, including technical specifications, quantities, and quality standards, to prevent future identification disputes.
• Clear pricing terms, including the currency, payment schedule, invoicing procedures, and any late payment interest rates or deposit requirements.
• Specific shipping terms using recognized standards like Incoterms to define exactly when title and risk of loss transfer from seller to buyer.
• Explicit express warranties alongside clear disclaimers of implied warranties, such as merchantability and fitness for a particular purpose, formatted in conspicuous uppercase letters as required by the UCC.
• Defined remedies for breach, including cure periods, buyer's rights of inspection, and a robust limitation of liability clause to cap total damages.
• Essential boilerplate provisions including choice of law, venue, severability, force majeure, and an integration or entire agreement clause.

Common mistakes to avoid

• Failing to account for Uniform Commercial Code (UCC) default gap-filler provisions, which automatically apply to terms like price, delivery, and place of performance if the contract remains silent.
• Writing overly broad or vague descriptions of the goods that leave room for interpretation and potential breach claims regarding quality or specifications.
• Neglecting to make warranty disclaimers conspicuous, such as failing to put the disclaimer of merchantability in bold or all-capital letters, which can render the disclaimer legally ineffective.
• Confusing the physical delivery of goods with the legal transfer of risk of loss, leaving one party unexpectedly liable for damaged cargo during transit.

Frequently asked questions