What Is the Different Between Contracts for Services and Contracts for Goods?

Contracts may be found anywhere. Whether you buy a vehicle, rent an apartment, have a mobile phone, pay for television, or just call a plumber to repair a leaking faucet, all of these actions are most likely controlled by a contract.

Furthermore, although there are many other types of contracts, you’re most likely to come across contracts for either commodities or services. Although both offer a structure for a transaction, there are significant distinctions between contracts for products and contracts for services.

Goods Purchase Agreement

A Contract for the Sale of Goods (also known as a Contract for Products) is an agreement between two or more parties to sell items. The contract specifies the quantity of items, the price per unit, the overall price, and the conditions of payment (usually upon delivery). Contracts for the sale of products also include provisions for failure or default by either party, as well as a provision for unexpected events that prohibit the contract from being completed (“act of God” or “Force Majeure”).

Two brief yet crucial points concerning Goods Contracts:

1- The buyer might put provisions in the contract that condition their acceptance on a quality check. This is known as a Destination Contract, and it signifies that the seller’s responsibility under the contract was not fulfilled until the products arrived at the buyer.

2- When a third party – a common carrier – carries the items to the seller, a shipping contract is formed. The seller must merely securely transfer the items to the common carrier, make appropriate delivery arrangements, and inform the buyer that the products are on their way. After that, any damage to the goods while in the common carrier’s custody is not the seller’s fault, and he has no liability for loss.

Service Agreement

A Contract for Services is an agreement between two or more parties to fulfill an explicit job or service. A contract for services, like a contract for the sale of commodities, describes the service to be done and establishes an accepted level of completion for these services. Service contracts also include provisions for non-delivery of the service (or failing to reach the set standard), as well as provisions for acts of God.

Contracts for products and contracts for services are similar in that they both impose legal responsibilities on contractual parties and need payment. Yet, the legislation controlling both kinds (specifically, the Statute of Frauds and the Uniform Commercial Code), the criteria governing partial and total performance, and the corrective procedures necessary when contractual obligations are not satisfied are vastly different. Before entering into any deal, it is critical to contact with an experienced attorney.