Overview of a Sale of Goods Contract

What is a Sale of Goods Contract?

Sale of Goods Contract

A Sale of Goods Contract is a short-form contract between a buyer and a seller for the sale and purchase of goods. A Sale of Goods Contract sets out simple terms governing the subject matter of the sale, the contract period, the delivery details, the purchase price, and the payment terms. Normally it is meant for simple, straightforward transactions. For more detailed and elaborate terms, use a Sale of Goods Agreement.

What are the essential elements of a Sale of Goods Contract?

Buyer & Seller: In any valid contract that is drafted for the Sale of Goods, 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. Goods: Goods are basically things that are traded in exchange for money. Things like money or immovable property are not governed through this contract. Transfer of Ownership: When a seller sells the goods in exchange for money, the ownership of that goods is automatically transferred to the buyer of that goods. 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. Payment method and deadline: The information about payment method, deadline for making payment, and interest accrued for late payments should be clearly written. Notification of defective goods: Whenever a buyer buys some product it is a natural course of action that some goods can be found defective because of shipping, mishandling, or manufacturing fault. So, it is very important for the buyer to notify the seller about the damaged goods and ask for a return. To safeguard return policy and minimize the loss, it is very crucial to include notification of defective goods clause 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.

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

Implied terms refer to those terms which are not expressly stated in a contract but as assumed to be included. For e.g.: When a buyer buys goods from the seller, they assume 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.

Features of Sale of Goods Contract 

  • Goods or movable property has to be the main topic or subject matter of a sale of goods contract.
  • Two parties are required for a contract of sale of goods. The good has to be handed over from one party to another. 
  • Transfer of a property’s ownership is also an important part of this contract. 
  • Price has to be discussed. Transaction or trade of goods and use of money has to be reflected.
  • Must have all elements of a legal valid contract.


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.

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