This document is an agreement to sell goods exclusively. It provides that the seller can only sell the goods to the buyer.
Legislation and this agreement
Transactions involving sale of goods in Australia are governed by legislation in each state or territory (eg, Sale of Goods Act 1923 (NSW), Goods Act 1958 (Vic); Sale of Goods Act 1896 (Qld); Sale of Goods Act 1895 (SA); Sale of Goods Act 1895 (WA); Sale of Goods Act 1896 (Tas); Sale of Goods Act 1954 (ACT); Sale of Goods Act 1972 (NT)) all of which have similar requirements (Acts).
Where a contract is silent in relation to certain aspects of the sale of goods transactions, the requirements set out in the Acts will apply to the transaction. It is therefore important that anyone drafting a sale of goods contract is aware of provisions set out in these Acts.
As this agreement provides that the seller can only sell the goods to the buyer in the relevant territory it may constitute "exclusive dealing" in contravention of section 47(2) of the Competition and Consumer Act 2010 (Cth) (CCA). Under the CCA, this would be the case if the parties to, or circumstances under, the agreement "has or is likely to have the effect of substantially lessening competition" (See section 47(10)).
The provisions of section 93 of the CCA provide an option to notify the ACCC of potential exclusive dealing conduct and the process followed by the ACCC in these circumstances.
This precedent agreement sets out the basic terms that should be incorporated into a sale of goods agreement. These include:
- description of the goods;
- purchase price;
- how to order the goods;
- how payment is to be made for the goods;
- what happens if payment is not made;
- transfer of title and risk in the goods; and
- operation of a security interest in the goods under the Personal Property Securities Act (Cth) 2009.
Using this document
As this is a document agreement, it only provides the framework under which a sale of goods transaction is recorded in an agreement. Each agreement drafted should incorporate the customised requirements of the relevant seller and buyer.
The manner in which goods are ordered will be different in each case depending on the internal policies and procedures of the seller.
The manner in which goods are delivered can be quite complex involving goods carried by sea, aircraft, road or a combination of all 3. Parties to the transaction should consider who is responsible for goods while they are in transit, what happens to the goods if they are damaged in transit, who pays transit costs or in cross-border transactions who is responsible for import/export permits and fees.
If the goods are sold across borders, the parties would need to consider amongst other things:
- the different conventions associated with international trade including the Vienna Sales Convention;
- how to settle disputes involving parties in different countries; and
- which country’s legal system should apply when interpreting the contract, etc.
Parties will also need to consider remedies available to the buyer and seller for non-performance under this contract.
In the commentary to the “sale of goods”, there is an extensive checklist of issues to be considered when involved in a sale of goods transactions. This checklist should be used when considering entering into, or providing advice on, a sale of goods transaction. The checklist can also be used as a guide when populating this framework document agreement.
For a precedent agreement for sale of goods, see “Agreement to sell goods (long form)”.
This document has been authored for Lexis Nexis by Elise Margow, Principal, Legally Speaking.
This document is prepared with the assistance of Specialist Editor Murray Landis, Partner, K&L Gates.