Top 5 FAQs about the sale of goods for sellers

1. What legal obligations do sellers have in relation to the sale of goods?

The Sale of Goods Act 1979 implies several terms in B2B (business to business) contracts for the sale of goods. Sections 12 to 15 of the Sale of Goods Act 1979 imply the following terms in B2B contracts for the sale of goods:

• Section 12 - title to the goods: in any sales contract, the seller should have the right to sell the goods and if sold, the goods will be free from any charge or encumbrance not disclosed or known to the buyer at the time the contract was made.

• Section 13 - sale by description: goods should fit the description given by the seller. For instance, if you sell a circular mirror, the mirror must be circular and not any other shape.

• Section 14 - implied terms about quality or fitness: goods sold should be of satisfactory quality and fit for their intended purpose or the purpose that the buyer made known to the seller.

• Section 15 - sale by sample: in a sale by sample, the goods should match the sample in quality and there should be no hidden defects.

Depending on certain criteria, such as the reasonableness of the exclusion, some of these implied terms (but not section 12) can be excluded from B2B contracts. Excluding these implied conditions allows the parties to define their own terms regarding these aspects in the contract, rather than relying on the default conditions set out in the Sale of Goods Act.

When the sale of goods or products is being made to consumers (B2C), additional legal obligations apply that cannot be excluded from the contract. Find out more about consumer rights and terms for B2C contracts in the question below.

2. What rights do consumers have in relation to the sale of goods?

A consumer is someone who:

• is not making a contract in the course of a business;

• is contracting with another party that is making a contract in the course of a business; and

• is being supplied goods of a type ordinarily supplied for private use or consumption.

When a seller supplies goods to a consumer under a contract, under the Consumer Rights Act 2015, the goods must meet certain standards and the seller must have the right to supply the goods. These rights are fixed in law and cannot be undermined – any terms or notices which try to take the consumer’s rights away will have no effect. This includes:

1. For distance and off-premises contracts, the consumer has a 14-day period cancellation right if they change their mind. The 14-day period starts the day after the consumer, or someone selected by the consumer, receives the goods. You should refund all monies received. This includes the outbound delivery cost, unless the consumer chooses to have the goods delivered by more expensive means than the cheapest standard delivery option offered. Some types of goods are exempt from the cancellation period e.g. ‘investment’ type products such as vintage wines, bespoke and custom goods and goods which will deteriorate or expire rapidly;

2. The goods must be of satisfactory quality - what counts as satisfactory is determined by what a reasonable person would think is satisfactory, looking at all the relevant circumstances;

3. The goods must be fit for a particular purpose the consumer has made known - if a consumer makes you aware, before the contract is made, that they intend to use the goods for a particular purpose then the goods must work for that purpose;

4. The goods should match any description, sample or model by reference to which they were supplied;

5. Certain information must be provided before the contract is made - the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (SI2013/3134) require you to give or make available certain information to the consumer before the contract is entered into - this information will vary depending on where the goods are sold (on-premises, off-premises or distance sales);

6. Installation must be done properly, where goods are both supplied and installed;

7. No other person should have rights over the goods or disturb the consumer’s use of them - the Consumer Rights Act makes it a requirement of your contract with the consumer that the goods are free from any charges or claims which they have not been told about (or do not know of). So you must inform the consumer if anyone else has rights over the goods (e.g. a right to use the goods) during the time that the consumer’s contract for the goods is in force.

3. What legal document should sellers use for the sale of goods?

A sales contract is a contract to transfer ownership of goods to the consumer in return for the customer paying a monetary price. A sales contract could be structured in the following ways:

1. Terms and conditions - these, for example, can be displayed in a store or appended to an order form. A clear process should be in place to ensure that customers accept those terms and conditions (e.g. by incorporating them into an order form or a customer confirming acceptance of the terms via a tickbox). Docue's order form template can be found here.

2. Standalone contract - this is an agreement that both parties will sign to indicate that they agree to the terms. The agreement will include all commercial terms (e.g. details of the goods / products and price), as well as the legal terms that apply to the sale of goods.

Docue's template contract for the sale of goods can be used in both of these ways.

4. What do terms and conditions for the sale of goods include?

Whether you use terms and conditions or a standalone contract, the contract for the sale of goods should include:

1. Scope of supply: the sales contract should include the ability to clearly define what goods / products are being provided, so there can be no dispute over what is expected to be provided to the customer;

2. Delivery details: key details relating to the delivery of the goods (such as when and where they will be delivered);

3. Supplier undertakings: the key obligations relating to how the goods are to be supplied and the supplier’s obligations in relation to its supply should be included;

4. Consumer protections: if the goods are being provided to individual consumers, it is a requirement of consumer protection laws in the UK that certain protections are offered to consumers in contracts (see question 2 above);

5. Faulty goods: provisions can be included that set out what happens when faulty goods are provided;

6. Supplier’s liability: if you are the seller, you will want to include limitations and exclusions on your liability and potential financial exposure, in the event that there is a claim by a customer under the contract relating to the goods; and

7. Termination rights: a section should be included in the sale of goods agreement that sets out each party’s right to bring the agreement to an end early.

Find out more by reading this comprehensive checklist.

5. How can Docue help?

Docue’s template contract for the sale of goods is lawyer-made, lawyer-maintained, and has lawyer-crafted guidelines to steer you through every stage of drafting an agreement which is right for your business. Once you have created a contract that is tailored to your business needs, you can send the contract to each of the parties for e-signing, if required, using Docue’s e-signature. After the contract is signed, you can store the agreement in Docue’s storage vault, Docue Drive, to ensure you always have quick and easy access to your contracts in one place. You can ensure you never miss a contract renewal again by enabling Docue’s handy reminders to notify yourself of the next upcoming deadline.

Sign up now to use Docue's sales contract template.