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Sales Contracts

A sales contract is an agreement between a buyer and seller covering the sale and delivery of goods, securities, and personal property other than goods or securities. In the United States, domestic sales contracts are governed by the Uniform Commercial Code (UCC). International sales contracts fall under the United Nations Convention on Contracts for the International Sale of Goods (CISG), also known as the Vienna Sale Convention.

Under Article 2 of the UCC, a contract for the sale of goods for more than $500 must be in writing in order to be enforceable (UCC 2-201). The sale of securities is a special case covered in Article 8 (UCC 8-319); to be enforceable a contract for the sale of securities must be in writing regardless of the amount involved. For the sale of other kinds of personal property, a minimum of $5,000 must be involved before an enforceable contract must be in writing. Otherwise, an oral agreement is enforceable as a binding contract.

Under the UCC a written sales contract should specify the parties involved the subject matter to be sold, and any material or special terms or conditions. Some states also require that the consideration—the amount and type of payment—be specified. The UCC does not require a formal sales contract, though. In many cases a memorandum or collection of papers is sufficient compliance. The courts have held that a written check can be considered a written memorandum of a sales agreement. The UCC allows a written sales contract to be enforced even if it leaves out material terms and is not signed by both parties. However, one party may not create a sales contract  on  its  own  that  is  binding  against  another  party,  and  an  enforceable  contract  must  be signed by the defendant or the one against whom the contract is sought to be enforced.