Overview of a Sale of Goods Agreement

What is a Sale of Goods Agreement?

A Sale of Goods Agreement is a contract between two parties governing the terms for the sale and purchase of goods.

A Sale of Goods Agreement defines the responsibilities of the buyer and the seller and establishes the terms on which a seller sells and transfers goods to a buyer.

A Sale of Goods Agreement also sets out the exact nature of the goods, as well as price and payment terms and what happens at the end of the contract.

What are the implied terms in a Sale of Goods Agreement?

Implied terms refer to those terms which are not expressly stated in an agreement but as assumed to be included. For instance, implied terms in a Sale of Goods Agreement can be defined as a buyer buys goods from the seller assuming it will serve the purpose and will be defect-free. In case of any disputes in the future, the court will take implied terms into consideration even though it is not mentioned or written on the contract.

What are the components of a Sale of Goods Agreement?

A Sale of Goods Contract is a formal contract or agreement between buyer and seller to regulate the buying and selling of goods in a legal manner to avoid disputes in the future. This will help both parties to protect their rights and avoid fraud in day-to-day business. These are the main things that should be included in a Sale of Goods Agreement.

Buyer & Seller: In any valid Sale of Goods Agreement, there must be two parties involved. One is responsible for selling the goods known as sellers and another is the purchaser of those goods known as buyers.

Date of the Agreement: This is the date on which the agreement is signed by both parties. I.e.; buyer and seller.

Description of goods: A proper description of goods along with the quantity that has been already discussed in the agreement should be clearly written to avoid any confusion.

Purchase price: This is the purchase price of the goods that have been agreed upon by both parties. Once the agreement is signed, the purchase price will remain fixed and cannot be changed throughout the agreement period.

Shipping Details: Shipping and delivery details are important to serve the buyer and transfer the ownership of the goods. Normally bulk or regular purchase order requires shipping and delivery details.

Risk of loss: Once the goods are shipped from the seller side, if anything happens in the transit then it will come under buyer responsibility.

Inspection of goods: The buyer has the right to inspect the goods and can ask for an exchange or refund if the goods are not as per the standard that has been agreed upon.

Taxes: after shipping the goods from the seller’s side, it is the buyer’s responsibility to pay all the taxes. so clear information regarding those taxes should be mentioned in a sale of goods agreement.

Payment method and deadline: The information about payment method, deadline for making payment, and interest accrued for late payments should be clearly written in a Sale of goods contract.

Termination of contract: Termination arrangement and provision should be clearly discussed while creating a sale of goods contract. This will help both parties to terminate the contract legally if they are not satisfied with the service offered. Normally a notice period is decided by both parties before terminating the contract.


A well-drafted Sale of Goods Agreement acts as a guarantee for both buyer and seller by providing them a strong legal footing in case of any dispute in the future. So, it is crucial for every business to have a valid sale of goods agreement before buying and selling goods.

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