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Nov 2012
09
November 09, 2012

What are the Terms and Conditions that Apply When you Buy or Sell Goods?

Whenever you buy or sell goods, you enter into a contract with the other party to the transaction. But what are the terms of that contract? If you do not have your own terms on your quotation, purchase order, acknowledgment or other form, then the terms of the contract likely will be either the other party’s terms or terms that the Uniform Commercial Code supplies. Either way, the terms of the contract probably will not be very favorable to you.

For this reason, you should have your own sets of standard terms of purchase and standard terms of sale, and you should have procedures that make it reasonably likely that your terms will apply to each contract that you enter.

A seller's standard terms should limit the seller's warranties and restrict the buyer's remedies for a product defect. For example, the seller's terms should limit the buyer’s remedy for a product defect to repair or replacement of the product and should bar the buyer from recovering lost profits. A buyer's standard terms, on the other hand, should provide for full warranties by the seller and comprehensive remedies for the buyer, including the right to recover lost profits.

Your standard terms should cover a number of other areas, including, for example, ownership of intellectual property, duties of confidentiality, your right to terminate, delays caused by casualties or other things beyond your control and return of tooling and other equipment.

Just printing your standard terms on your forms generally is not enough to assure that those terms will be the terms of the contract. To increase your chances of winning the "battle of the forms," you will need special wording on your purchase and sale forms, and in some cases you may need to take additional steps

Often it is impossible to print all of your terms of sale or purchase, in readable form, on the reverse side of your quotation, purchase order or other form. More and more companies are putting their terms of sale and purchase on a web site and giving the web site address on the front of the form. This eliminates the struggle of trying to fit your terms on the reverse side of your quotation, purchase order or other form. And it has the added benefit of making it much easier to change your terms.

But if you decide to put your terms on a website, then great care must be taken in drafting the contract formation language to be placed in your standard terms of purchase or sale and on the face of your quotation, purchase order and other forms.

Warner Norcross & Judd LLP can help you develop standard terms of purchase and sale and can advise on how to maximize the likelihood that your terms will become the terms of the contract.

The Warner Norcross & Judd Commercial Transactions Group deals with the legal aspects of buying and selling goods and services. Members of the group have extensive experience with the important documents that buyers and sellers need, such as standard terms of sale and purchase, dealer/distributor agreements, sales representative agreements, license agreements, consignment and bailment agreements and tooling agreements. We can offer fixed prices and package arrangements for commercial transactions work. If you need assistance in any aspect of buying or selling goods or services, contact Jim Breay, chair of the Commercial Transactions Group, at 616.752.2114 or jbreay@wnj.com.

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