Product Sales Agreement Checklist

Dec 19, 2013

By Craig T. Watrous 

Buying and selling products in Colorado involves a myriad of details and specifications.  It’s easy to overlook key terms and conditions when drafting or reviewing a product sales agreement.  While not meant to be comprehensive, this list contains some critical provisions that should be considered in a well drafted sales agreement.


1. Written Agreement.  We live in an age when it is important to have agreements memorialized in writing. Moreover, in Colorado, contracts for the sale of goods priced at $500 or more generally will not be enforced by courts without a writing sufficient to demonstrate that a contract was actually made between the parties.

2. Offers and Acceptances.  If it isn’t expressly delineated, offers can generally be accepted by any reasonable method depending on the circumstances.

3. Parties.  Who are the actual parties to the agreement?  Are there any third party beneficiaries? 

4. Description of the products.  What is actually being sold?  Make sure you know what you’re getting.  On the flip side, be sure you know what you’re selling.

5. Delivery terms.  Time, place, and manner.

6. Risk of loss and insurance.  Who is ultimately responsible?

7. Purchase Price. Be precise. If a formula is used, make sure it is explicit and understandable.

8. Payment of the purchase price.  Time, place, medium, and manner.

9. Inspection of the goods.  How much time does the Buyer have to inspect the products for defects?

10. Security for performance.  Does the Seller want to retain a security interest in the products until they are paid for?

11. Representations and warranties.  What representations and warranties do and do not apply to the products?  Are there any limitations on the Seller’s liability?

12. Output requirements.  Exclusive dealing? Minimum output? Estimated sales?  These questions should all be answered.

13. Cancellation or termination of the contract. How and when can the contract be terminated by each party?

14. Breach of the Agreement.  Sales agreements should specify which events will result in a breach of the agreement.

15. Assignment of contract rights.  Can the parties assign their rights to others?

16. Remedies of the Seller and Buyer for breach of the agreement.  So a party breached, what rights does the non-breaching party have?  Suspend orders?  Stop shipments?  Does interest accrue on unpaid balances?  Can the agreement be terminated?

17. Choice of law and venue.  Does Colorado law apply?  Do the Denver courts have exclusive jurisdiction to hear the parties’ disputes?

18. Tax Considerations.

(Mallon & Lonnquist, LLC, is a business, real estate, finance, and litigation law firm. Craig T. Watrous is a Colorado business attorney with Mallon & Lonnquist, based in Denver, Colorado. Craig regularly represents clients on all sides of product sales agreements: manufacturers, distributors, and buyers. Craig can be reached at cwatrous@mallon-lonnquist.com.)


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