Contracts for the Sale of Goods and Services

Transactional Attorney Explains Vendor and Customer Contracts

No matter what kind of business you own or wish to start, your company likely relies on sales contracts, both with your customers and your vendors. These contracts may relate to the sale of either physical goods or services, though different laws and regulations apply to each type. The sale of goods is regulated by the Uniform Commercial Code (UCC). On the other hand, contracts for the sale of services must conform to state and federal contract laws. If you own a business, then you should ensure that your vendor and customer contracts abide by these laws and protect your company in the event of a dispute. These disputes may arise over disagreements concerning warranties, defective or broken products, failure to provide services and more.

A Chicago transactional attorney from LAD Law group can assist you at any stage of drafting, signing or disputing sales or service contracts. We can help you prepare pre-printed forms and/or review a contract from a vendor. If a dispute does arise, then we can help you explore options for alternative dispute resolution or litigation.

What Are the General Contract Requirements for the Sale of Goods?

The Uniform Commercial Code (UCC) is a uniform act concerning contracts that most states have adopted as law, though the details may vary according to jurisdiction. The UCC regulates contracts for the sale of goods (among other things), and includes rules concerning:

  • Form. Article 2 of the UCC includes rules for when a written contract is mandatory. However, it is always best to have a written contract, as opposed to an oral agreement.
  • Formation. Generally, a valid contract requires a formal offer and acceptance of that offer.
  • Modifications. Article 2 also contains basic rules for modifying an existing contract. Usually this simply requires agreement by both parties.
  • Obligations. UCC rules include provisions for delivery and payment as well as other obligations, including warranties.
  • Performance. Typically, performance of a sales contract involves the vendor delivering goods and the buyer paying for them. The UCC also includes rules concerning a variety of potential issues in contract performance. For example, a seller or vendor may have time to correct a mistake, such as incorrect delivery, without forfeiting payment.
  • Breach of contract. Most commonly, breach of a sales contract occurs when the vendor fails to deliver goods within the terms of the agreement. According to the UCC, a sales contract must include provisions for possible breaches.
  • Remedies. Article 2 includes possible remedies if one of the parties breaches the terms of the contract. For example, vendors may withhold delivery or cancel orders due to lack of payment. Conversely, buyers may claim a refund or cancel orders due to lack of delivery.

The UCC specific rules and requirements are complex and comprehensive, and failure to conform to these regulations typically invalidates a sales contract. Therefore, if your business buys or sells products, then consult a transactional attorney for assistance with your sales contracts.

What Are the Requirements for Service Contracts?

Sales contracts may apply to services as well as tangible goods, though a single sales contract may include terms for both goods and services. However, service agreements are not bound by the same laws and regulations as contracts for the sale of goods. Instead, these types of agreements must meet the same basic requirements as any other business contract.

If your business provides services to customers, then common issues you may wish to address in your standard contract include:

  • Billing structure. Depending on your circumstances, you may charge a flat fee for a service, charge hourly or work on retainer.
  • Service requirements. Your service contract should always clearly state your obligations, including details about the service you provide.
  • Right of ownership. If your business creates materials or written works as a service, then you should clarify ownership and usage rights in your contract.
  • Warranty terms. Service and repair agreements are common aspects of a warranty. Be sure to detail what services a warranty includes and what event invalidate the contract.
  • Remedy. Sales contracts should include language about your obligations in case you cannot deliver the service for any reason.

Since there are fewer rules concerning a sales contract for a service, you can tailor your forms to your business. However, it is best to consult a transactional attorney, who can work to ensure all contracts protect your business.

Our Transactional Attorney Can Help Draft a Sales Contract

The business attorneys at LAD Law Group offer a complete range of services to entrepreneurs and business owners throughout Illinois. We can assist you in the creation or review of sales contracts for goods or services. If necessary, we can explain UCC requirements and help you draft an enforceable contract or company form.