This contract tip is about what you need to know to draft a contract involving a physical good.
Whenever I work on a goods contract, I make sure I'm clear on these three questions before I start:
1. How will the buyer use the good? Contracts for purchasing goods are different depending on the type of use planned. Is the buyer using the good to run tests in a lab, manufacture parts in a factory, or combine with other products for sale to consumers?
2. What type of business is the seller? All customers expect the seller to stand behind its goods, but the expectations are different depending on the seller’s type of business. Is the seller merely a distributor of goods originating from unrelated third parties? Or is it or its affiliate is the manufacturer?
3. Are there any customizations? The design of the product and the source affect many provisions in contracts to purchase or sell goods. Ensure you know if it is off the shelf, custom-built with the seller’s design, or custom-built with the buyer’s design.
What other information is important to know before we dive into a goods contract?
