Terms of Trade
Terms of trade are the seller's conditions for the sale of goods or the provision of services to the buyer of the goods and the receipt of those goods and services.
The most common experience with these is payment on delivery, for example, payment for goods at the supermarket or convenience store or payment for services provided by a dentist or a plumber.
Other Terms of Trade
There are other terms or conditions which apply in more complex transactions, some of which are:
* Representation – A representation can be any form of advice, recommendation, information, assistance or service given by the seller in relation to the goods.Most often the seller may have a condition of sale that whatever the seller may have said or done in relation to the goods can not be relied on and the buyer should rely on there inquiries before purchasing goods. Whether or not the seller can rely on such a condition will depend on the circumances surrounding the representation.
* Sale by description and conformity with description – Particularly for sale of goods in bulk or large quantity, the buyer examines the sample first before placing orders. Sale by description occurs where the goods may not be in existence. It is an demanded condition of sale that the goods will confirm with the description.
* Conditions or Warranty – A condition is a provision in the contract, breach of which will allow the buyer to bring the contract to an end and reject the goods. If the provision is a warranty, then the buyer can only sue for damages. Predominantly, goods of technical nature, such as household equipment and computers, come with the manufacturers' warranty as to defect. Whether a provision in the contract is a condition or warranty will depend on the construction of the contract.
* Implied terms – Implied terms are those terms of trade that do not appear in a contract but are claimed by law or industry practice. Some common accepted terms of trade are: that the seller owns the goods being sold or has a right to sell the goods; that the goods being sold are fit for purpose; and that the goods are of merchantable quality.
* Delivery and Installment deliveries – A contract may stipulate when, how and where the goods are to be delivered. Sometimes the seller may have a condition that any delay on its part will not entitle the buyer to sue for damages or cancel the order.
* Acceptance of goods – Upon delivery, the buyer is to have inspected the goods and accepted them. The seller, as a condition of sale, may wish to absolve itself from any liability once the goods are delivered.
* Risk – Risk is any peril associated with the goods such as the risk of loss or risk of damage. It is a normal term of the contract that the risk in goods passes to the buyer upon delivery.
* Retention of title – The seller may wish to retain title in the goods if the buyer fails to make payment for the goods. The title to the goods will not pass to the buyer upon delivery. Upon bankruptcy or liquidation of the buyer, the seller may be able to repossess the goods from the receiver or liquidator and not wait in line with other creditors for payment after disposing of the buyer's assets.
* Stipulation as to time of payment – Whilst most sellers would prefer prepayment or payment upon delivery, in business, credit is sometimes allowed to the buyer to pay for the goods after, say 30 days or 60 days. Some sellers may charge interest on overdue accounts.
There are various federal and state laws governing the provisions of goods and service.A seller may not be able to opt out of its certain statutory obligations.
Sellers should have their existing contracts reviewed or have certain standard terms of trade drafted by the solicitor. Buyers may wish to have such contracts reviewed by their solicitor before executing them.