A Contract of Sale of Goods Explained

Standardized Legal Documents A Contract of Sale of Goods Explained

Everything You Need To Know About Creating a Contract of Sale of Goods

When transferring goods, it is crucial to protect your legal rights and obligations. If you don’t know anything about creating legal documents or writing contracts in general, DoNotPay has got your back. In this guide, we will teach you everything you need to know about a contract of sale of goods and how to create it effortlessly!

What Is a Contract of Sale of Goods?

The contract of sale of goods is a bilateral legal document in which the seller agrees to transfer property in goods to the buyer. The seller transfers, or vows to transfer, ownership of the goods for a negotiated price. 

Goods refer to all kinds of movable tangible property except actionable claims and money—this can even include items such as crops and stock. 


This contract does not account for immovable property and services. It is different from an agreement of sale, which deals with an immovable property sale.

Prerequisites of a Contract of Sale of Goods

There are four essential elements for a contract of sale to be valid:

  1. Consideration—The seller exchanges their goods for the buyer’s money or assets
  2. Offer—The buyer makes an official offer to buy the goods
  3. Acceptance—Both parties accept the terms and conditions of the transaction 
  4. Legal capacity—Both parties are legally sound, mentally able, and above the age of 18

How Does a Contract of Sale of Goods Work?

A contract for sale of goods commences when the buyer shows interest in the seller’s goods.

Both parties meet to negotiate the terms and conditions, including the quantity and quality of goods, purchase price, inspection periods, and potential liabilities. Once they agree to the terms, the parties compose and sign the pact. 

In some states, the contract needs to be notarized by a notary public

What Should a Contract of Sale of Goods Cover?

Several elements should be included for a contract of sale of goods:

Key Elements

Brief Explanation

Two parties The seller promises to transfer ownership to the buyer. The buyer and the seller need to be two different people; otherwise, the agreement is void
Goods A detailed description of the goods, such as:

  • The quantity and quality
  • Weight, color, and size
Transfer of ownership The agreement must include a clause for an absolute transfer of ownership. The ownership transfer does not equate to the physical delivery of goods
Purchase price  Both parties need to negotiate compensation for the goods. It does not have to be money. It could be an exchange of goods or a mix of money and goods
Payment details Terms and conditions of payment, such as:

  • When the amount will be paid
  • Whether the amount is in full or in installments
  • Whether there is a recurring billing cycle
  • Any other payment details
Delivery  This clause will include information like:

  • Date and time of expected delivery
  • Delivery location
  • Who is responsible if the goods are lost, stolen, or damaged
Inspection During the inspection period, the buyer inspects the goods to confirm the quantity and quality
Breach The section includes possible remedies if one party fails to honor the agreement. Remedies can include: 

  • Specific performance
  • Financial compensation
  • Termination of the arrangement
Signature Signatures of both parties confirming they have read and understood the terms and conditions

All contracts of sale of goods must be in writing. Verbal contracts are not legally binding and not enforceable in a court of law.

Is a Contract of Sale of Goods Legally Binding?

To make sure that a contract of sale of goods is legally binding, both parties must willingly sign the agreement. If any party is forced to sign the contract, it won’t hold in a court of law. 

Once signed, if the buyer or the seller fails to honor any term of the contract, they will be in breach of it and risk facing legal consequences.

Learn To Draw Up Legal Documents With DoNotPay

Whether you’re the buyer or the seller, you need to know how to draw up legal documents. Have you spent hours looking for contract templates online without any success? Do you want to consult a lawyer but don’t have the means to hire a professional? DoNotPay has got your back! We can generate various legal documents for you in an instant! 

Follow these instructions to create your customized agreement:

  1. Register for DoNotPay
  2. Choose the name of the document you need
  3. Customize your agreement by answering our chatbot’s questions
  4. Download, print, and sign your customized document

You might also need to get your document notarized by a state official.

DoNotPay can create many contracts and agreements, such as:

Real Estate Business Contracts Other

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