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A Simple Sales Contract in New York (II) – A Story of Few Words

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1380348_winter_idyll.jpgIs there really a simple sales contract in New York? As we pointed out previously, the answer is no. Every business should know that there is always much more to even the simplest sales contract than meets the eye; unspoken promises included.

A simple sales contract, to most people, means nothing more than a contract to buy and sell goods. This does not have to be, and often is not, what most people think of as a full-blown written contract, which sets out in great detail what each party promises to do and is promised to receive in return. That, of course, would be best; but it’s not feasible or necessary.

Most sales contracts for the purchase of goods in New York fall under the special set of rules known as the Statute of Frauds, which govern sales of goods worth $500 or more. The only writing that requires is a simple note, memorandum, or correspondence, which states just the type and amount of the goods to be sold. It does not even necessarily have to include the price; oral evidence can be used to fill in the blanks. It can be enforced against the parties who signed the writing. It can be established through partial performance, even without any writing; i.e., if the Buyer accepts delivery of the goods, he can be forced to pay the agreed price for them. Likewise, if the Seller accepts the Buyer’s payment, the Seller can be forced to deliver the goods the Buyer has paid for. If between two merchants, the sales contract can be established where one of them sends the other a written confirmation of a contract, which often can be nothing more than an invoice, and the other fails to respond, or object, within ten days. See UCC 2-201.

Even with writings that record only the bare essentials of a sales contract, a New York business that sells goods can be liable for promises that it did not expressly make and are not specifically written anywhere. One, as we previously discussed, is the implied warranty of merchantability.

A second unwritten promise often found in a sales contract, is the implied warranty of fitness for a particular purpose. See UCC 2-315. A good example of this is when a Buyer calls a parts supplier to purchase widgets, but does not know which widgets it should buy. The Buyer explains to the Seller what it needs the widgets for, asks the Seller to recommend one, and buys the type of widgets the Seller recommends. If the widgets turn out to be the wrong ones for the job, the Seller could be liable for recommending the wrong widgets.

There is a way for a business to avoid such unspoken promises in a sales contract. One common way is to sell a particular item in “As Is” condition. Most everyone has seen those words before; most have probably bought something that was labeled “As Is.” Those two little words, however, have a lot of power. If they are in writing and are conspicuous, they exclude all implied warranties. See UCC 2-316.

As you can tell, there really is nothing simple about contracts for the sale of goods in New York. They contain promises that are not spoken or written; and two seemingly innocuous little words can nullify many of those promises. They do point out, however, something that businesses really should remember: Sometimes, much can be said in few words.

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