Also known as:sales contracts · contract for sale · sales agreement
Written by attorneys · grounded in primary & secondary sources — see below
An agreement between parties under which one transfers ownership of goods or an interest in property to the other in exchange for a price. The agreement remains enforceable even when price or other terms are left open if the parties manifest intent to be bound and a reasonable basis for remedy exists.
Sources & Authorities
How it applies
Common Examples
6
Merger After Real Property Closing
Stephen Shaw sold his home to Sierra Santos. At closing the deed was delivered and recorded. Months later Santos discovered that the roof leaked badly even though the sales contract had promised the property was in good condition. Shaw argued the contract promise had merged into the deed and was extinguished. Because the promise concerned the physical condition of the property rather than title, the court held the promise survived closing and remained enforceable.
Open Price Term in Goods Sale
Solstice Ventures agreed to supply solar panels to Skyline Construction for residential projects. The parties exchanged emails confirming the deal and began shipments and payments but never fixed a per-panel price. When market costs rose Solstice demanded a higher price. The court enforced the contract at a reasonable price at the time of delivery because the parties had manifested intent to be bound despite the open price term.
Select any source to read its text and confirm it supports the definition.
Cases
Uniform Acts
Model Codes
Restatements
Study Supplements
Embedded Software as Goods
Sterling Manufacturing sold diagnostic machines to Sentinel Security. Each machine contained an embedded computer program that controlled its functions and came with supporting documentation. When a security interest attached the program was considered part of the goods because it was associated with the machines in the customary manner. The sales contract therefore covered goods under the UCC definition.
Implied Warranty in Vehicle Sale
Scott Summers purchased a new car from a dealer. The sales contract contained a fine-print disclaimer of all warranties. After repeated breakdowns Summers sued claiming breach of an implied warranty of merchantability. The court refused to enforce the disclaimer because it was not conspicuous and the buyer had not been given a fair opportunity to understand its effect.
Sylvia Santos retained a law firm under a written engagement letter to handle a commercial dispute. The letter set fees but left the exact scope of services open. When the firm later billed for additional work Santos refused payment claiming no enforceable agreement existed. The court upheld the contract because the parties' conduct and partial performance supplied a reasonable basis for determining the obligations.
O’Steen v. State Bar of Arizona433 U.S. 350, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977)
Punitive Damages in Defective Product Sale
Selena Singh bought a new car whose paint peeled prematurely. Evidence showed the manufacturer had known of the defect for years yet continued selling the vehicles. Singh sued for breach of the sales contract and sought punitive damages. The court permitted the punitive award after finding the manufacturer's conduct was reprehensible and the ratio to compensatory damages was reasonable.
BMW of North America, Inc. v. Gore517 U.S. 559, 575, 580-81 (1996)
Common questions
Frequently Asked
5
Does a sales contract for goods fail if the price is left open?+
No. Under the UCC parties may form an enforceable contract for sale even though the price is not settled. A reasonable price at the time for delivery supplies the missing term when the parties intended to be bound.
Supporting sources
What happens to contract promises after closing on real property?+
The merger doctrine extinguishes contractual promises that relate to title once the deed is delivered. Promises concerning the physical condition of the property do not merge and remain independently enforceable unless the parties clearly intend otherwise.
Supporting sources
Are embedded computer programs treated as goods in a sales contract?+
Yes when the program is associated with the goods in the customary manner or when ownership of the goods carries a right to use the program. The UCC definition of goods expressly includes such embedded programs and supporting information.
Supporting sources
Can a buyer revoke acceptance of nonconforming goods after planting or using them?+
Yes if the nonconformity substantially impairs value, the buyer accepted without discovering the defect because of seller assurances or difficulty of discovery, and revocation occurs before any substantial change not caused by the defect itself. Timely notice to the seller is also required.
Supporting sources
Does prior acceptance of defective shipments prevent a later demand for adequate assurance?+
No. Acceptance of an improper delivery does not prejudice the right to demand adequate assurance of future performance when new and distinct concerns about quality arise.
Supporting sources
32 N.J. 358, 161 A.2d 69 (1960)Torts
…The uncontradicted proof shows that the policy was not shown or given to Henningsen prior to or at the time of execution of the sales agreement; it was delivered with the car. No one suggests that the clause limiting the dealer’s liability to replacement of defective parts and excluding implied warranties as well as responsibility…
Secured TransactionsRights of third parties; perfected and unperfected security interests; rules of priority (§ 9-301, et seq.) · Defenses against assignee; modification of contract (§§ 9-404 through 9-406)UBEIntermediate