Sale of Goods Agreement

What is a Sale of Goods Agreement?

A Sale of Goods Agreement is a contract in which the Seller transfers property to the Buyer in exchange for money. Sale of Goods Agreements can be used by commercial parties or by consumers. They are most frequently used between commercial parties (businesses). For example, one business can purchase manufacturing parts from another business. However, the agreement can be used for consumer purposes where the Seller supplies goods to a consumer (someone buying in a personal capacity). For example, a consumer may purchase horse grain mix from a Seller to feed their horses.

What must a Sale of Goods Agreement contain?

The contract should cover whether the goods are:

• Existing goods (goods that exist and are ready for immediate delivery); or
• Future goods (goods that must be acquired or manufactured first).

The document should also cover the type of goods being sold, the purchase price, when ownership will transfer, and how delivery will take place.

The agreement is a written document covering the Buyer and Seller's intentions. The parties can be individuals or businesses, and the agreement can be for one or multiple goods, which means the Seller and Buyer can agree to the purchase of a single good or multiple goods that can be delivered on different dates.

What is not allowed in a Sale of Goods Agreement?

The property must be personal property, such as movable items including vehicles, clothing, food, furniture, etc. and not:

• Real estate (house, commercial building, etc.);
• Money;
• Securities (stocks, bonds, shares, etc.);
• Intellectual property (copyrights, trademarks, etc.); or
• Other intangible goods (logo, brand, etc.).

What is the difference between a Merchandise Distribution Agreement and a Sale of Goods Agreement?

The primary difference between a Merchandise Distribution Agreement and a Sale of Goods Agreement is that in a Merchandise Distribution Agreement, the distributor is an intermediary between a supplier and end customer or retailer. On the other hand, in a Sale of Goods Agreement, the seller directly sells to the purchaser who receives ownership to the goods. In a Merchandise Distribution Agreement, ownership may still rest with the supplier until such goods are sold to the end-user.

Who can enter into a Sale of Goods Agreement?

The seller and buyer signing the agreement may be:

• Individuals: a group of individuals may sign the agreement.
• Corporations: corporations can sign a sale of goods agreement. The agreement can also be mixed with an individual and corporation as the signatories.
• Other: other entities may sign, such as a trust or a franchise.

The signatories to the contract must be at least majority age and not under a disability. The ages of majority are as follows:

• Alberta, Manitoba, Ontario, Prince Edward Island, Quebec, Saskatchewan: 18 years old.
• British Columbia, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Yukon: 19 years old.

What is the duration of a Sale of Goods Agreement?

The duration of a sale of goods agreement may vary. The duration can be open-ended with the parties agreeing on when to terminate or cancel their agreement. The agreement can also be for a fixed-term such as 5 years or until a certain event has been satisfied. The duration of the contract is flexible and is based on the parties' needs.

What has to be done after a Sale of Goods Agreement is ready?

After the document is complete, the Seller and the Buyer must sign and date the agreement. Each party needs to keep a signed copy for their records. The parties must then make arrangements for delivery and insurance if agreed to in the contract.

Which laws are applicable to a Sale of Goods Agreement?

Sale of Goods Agreements are governed by specific statutes including consumer protection law, antitrust law, and potentially intellectual property and franchise law. Some pieces of legislation on consumer protection include the following:

Ontario: Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A and the Sale of Goods Act, R.S.O. 1990, c. S.1

Alberta: Consumer Protection Act, RSA 2000, c C-26.3 and the Sale of Goods Act, RSA 2000, c S-2

British Columbia: Business Practices and Consumer Protection Act, SBC 2004, c 2 and the Sale of Goods Act, RSBC 1996, c 410

Manitoba: Consumer Protection Act, CCSM c C200 and The Sale of Goods Act, CCSM c S10

Saskatchewan: The Consumer Protection and Business Practices Act, SS 2013, c C-30.2 and The Sale of Goods Act, RSS 1978, c S-1

Quebec: Consumer Protection Act, CQLR c P-40.1

New Brunswick: Consumer Product Warranty and Liability Act, SNB 1978, c C-18.1 and the Sale of Goods Act, RSNB 2016, c 110

Nova Scotia: Consumer Protection Act, RSNS 1989, c 92 and the Sale of Goods Act, RSNS 1989, c 408

Prince Edward Island: Consumer Protection Act, RSPEI 1988, c C-19 and the Sale of Goods Act, RSPEI 1988, c S-1

Yukon: Consumers Protection Act, RSY 2002, c 40 and the Sale of Goods Act, RSY 2002, c 198

Nunavut: Consumer Protection Act, RSNWT (Nu) 1988, c C-17 and the Sale of Goods Act, RSNWT (Nu) 1988, c S-2

Northwest Territories: Consumer Protection Act, RSNWT 1988, c C-17 and the Sale of Goods Act, RSNWT 1988, c S-2

Newfoundland and Labrador: Consumer Protection and Business Practices Act, SNL 2009, c C-31.1 and the Sale of Goods Act, RSNL 1990, c S-6

If the commercial parties are dealing with each other on an international level and are part of a treaty country under the United Nations Convention on Contracts for the International Sale of Goods, each Province and Territory will have an international sale of goods law. A typical example of two treaty countries dealing with each other includes the United States and Canada. The international sale of goods law can be excluded by contract.

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