Today's contract tip is about defining the goods in a purchase agreement.
Even if you work mostly with digital products and services, it's important that you understand how to draft provisions for for buying and selling goods. There are definitely some nuances to how we word it.
1. Separate goods from services - Some contracts lump together the goods and services into a single defined term like product or work. I do that sometimes myself, but I always have a separate definition that covers only the tangible goods. We need that stand-alone term in the provisions that cover things like delivery terms, how title passes, and product warranties.
2. Distinguish goods from deliverables - Contracts often mix up goods and deliverables, lumping them together. I prefer to keep them separate so I can customize other provisions like warranties and indemnities. I define deliverables as the tangible work product from the paid services purchased by the customer. I define goods as the vendor's core products not produced with paid services.
3. Be precise about what is included in goods - Some goods definitions are narrow: "Goods means the Silver Star Widget Model XYH-3 described in Exhibit A." Others are broad: "Goods means anything delivered by the Seller to Buyer." Which approach is better for you depends on the nature of the deal and whether you are buying or selling the goods.
What is included in the goods definition is especially important if the vendor is providing ancillary items. Customers need to make sure the warranty covers everything that the customer receives with the good, not just the main product. Otherwise, you may find, as my clients have in the past, that the product warranty does not cover some of the things provided by the vendor.
What other advice do you have for people thinking about goods definitions?
