Sale of Goods Agreement

What is a Sale of Goods Agreement?

A Sale of Goods Agreement is a contract that a seller and a buyer can enter into for the sale of certain goods. It outlines the terms and conditions of the sale, such as the price and delivery information. This document can be used regardless of whether the good or goods being sold are brand new or second-hand. It likewise covers any type of sale, whether it's a one-time sale or multiple shipments overtime.

In a Sale of Goods Agreement, the ownership of the goods transfers to the buyer.

What are the different types of sale contracts:

This document can be used as one of the following types of contracts for the sale of a motor vehicle:

• Sale of Goods Agreement. This is a document that a seller and a buyer can enter when goods are being sold.
• Deed of Sale of Motor Vehicle. This involves the sale of a motor vehicle and requires the registration of the sale before the Land Transporation Office.
• Deed of Sale of Real Property. This involves the sale of real property such as lands and buildings, and requires registration of the sale before the Register of Deeds where the property is located.

What is the difference between a Sale of Goods Agreement and a Distribution Agreement?

While a Sale of Goods Agreement and a Distribution Agreement are similar in that they transfer the ownership of goods or products from the seller to the buyer, in a Distribution Agreement, the distributor markets, sells, or distributes the products of the supplier, while in a Sale of Goods Agreement, the buyer is not under any obligation to distribute the products or goods that were bought from the seller.

Is it necessary to have a Sale of Goods Agreement?

Yes, because this will lay down the terms and conditions of the lease and will prevent the parties from reneging on the Sale of Goods Agreement. This will also serve as documentation for what was agreed upon by the buyer and the seller.

What must a Sale of Goods Agreement contain?

A Sale of Goods Agreement contains the following information:

• The identity of the buyer and the seller,
• The description of the goods to be sold,
• The manner of sale whether a one-time sale or multiple shipments over time,
• The payment of the purchase price, and
• The manner of delivery of goods.

Who can enter into a Sale of Goods Agreement?

The buyer and the seller are the parties who should sign the Sale of Goods Agreement. Note that the seller must be the owner of the goods. If the buyer or the seller is an organization, the signatory may be the organization's representative.

The organization's representative must be equipped with a Secretary's Certificate, if the buyer or the seller is a corporation, a Partners' Certificate if the buyer or the seller is a partnership, or a Special Power of Attorney if the buyer or the seller is a sole proprietorship or individual, before they sign the Sale of Goods Agreement.

Note that minors or persons below 18 years of age cannot by themselves buy or sell goods under a Sale of Goods Agreement. Their parents or legal guardians should sign the agreement for them in their exercise of parental authority over the said minor.

What has to be done once the Sale of Goods Agreement is ready?

Once the Sale of Goods Agreement, at least two original copies of the same must be printed. The attachments if any should be attached to all original copies of the document (i.e. Proof of authorization, or list of goods that will be sold). Once the Sale of Goods Agreement has been printed and the attachments attached if any, the buyer and the seller should review and sign all original copies of the same.

The buyer and the seller may notarize the Sale of Goods Agreement by acknowledging the same before a notary public in which case at least three original copies should be printed. To notarize the document, the buyer and the seller must personally appear before a notary public to acknowledge that they have signed the document freely and voluntarily. They should also present a valid I.D. issued by an official agency bearing their photograph and signature such as a driver's license or a passport, among others.

The notary public will require one original copy of the document. Once notarized, the seller and the buyer should each keep at least one original copy of the notarized document.

Which documents should be attached to the Sale of Goods Agreement?

The following should be attached, if applicable:

• The list of goods that will be sold.
• The proof of authorization for the representatives should be attached if any:
  • A Secretary's Certificate if the buyer or the seller is a corporation.
  • A Partners' Certificate if the buyer or the seller is a partnership.
  • A Special Power of Attorney if the buyer or the seller is a sole proprietorship or individual.

Is it necessary to notarize a Sale of Goods Agreement for it to be valid?

No, however, notarization of the document converts the document from a private document to a public document so that it becomes admissible in court without the need for further proof of its authenticity, meaning, the document will be presumed to be validly written and signed once it is shown to court in case a dispute is brought before it.

What are the costs involved in the finalization of the Sale of Goods Agreement?

Notarization fees for a Sale of Goods Agreement are typically PHP100 to PHP500. However, some notaries public may charge based on the percentage of the amount of purchase price involved, which is usually ay 1%.

What should be complied with if the seller sells all of his goods under the Sale of Goods Agreement?

If the seller sells all of his goods under the Sale of Goods Agreement, the seller may be required to apply for a Certificate of Registration of Bulk Sales before the Department of Trade and Industry.

The purpose of this certificate is to avoid defrauding the creditors or other stakeholders of the seller. The seller should make a sworn statement laying down the list of creditors to whom the seller may be indebted including the amount of any existing loans that are not yet paid by the seller. The seller should also provide a detailed inventory of the goods before their ownership is transferred to the buyer, and notify the creditors listed in the sworn statement at least ten days before the actual sale of the products by the seller to the buyer.

The above requirements and other requirements (i.e. sole proprietorship, partners, or corporate board resolution) included in the following website of the Department of Trade and Industry should also be completed.

Which laws are applicable to a Sale of Goods Agreement?

The Civil Code of the Philippines governs sales of goods. Further, other laws, such as the Philippine Competition Act (Republic Act No. 10667), and the Bulk Sales Law may also apply.

How to modify the template?

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