The following domestic Acts and regulations apply to sale of goods contracts in England and Wales:

The following international rules apply in the UK:

The UK has not ratified the UN Convention on Contracts for the International Sale of Goods 1980.

Standardised terms must be expressly incorporated into contract to have binding effect. The following standardised terms are commonly used:

The essential requirements to create a legally enforceable contract are as follows:

Offer. An offer is an expression of willingness to contract on specified terms, which is made with the intention to create a binding agreement if accepted by the offeree. An offer can be express or implied from conduct, and can be addressed to one particular person, a group of persons or the world at large. Offers are generally revocable and can be terminated by any of the following:

An offer is different from an invitation to treat. An invitation to treat invites offers to be made. For example, at an auction, the auctioneer makes an invitation to treat to potential bidders and each bid is an offer that the auctioneer can accept or reject (Payne v Cave (1789) 3 TR 148). Other examples of invitations to treat are advertisements, price lists and catalogues (Grainger and Sons v Gough [1896] AC 325).

Acceptance. An acceptance is an unconditional assent to the terms of the offer. The acceptance must be communicated to the offeror. Silence will not amount to acceptance (Felthouse v Bindley [1862] EWHC CP J35) but acceptance can be implied from conduct in some circumstances. Generally, the offeror must receive the acceptance before the contract is effective. If the offeror prescribes a method of acceptance, the offeree must use that method. Use of any other method will constitute a counteroffer.

In determining when an acceptance is received, the English courts have distinguished between non-instantaneous and instantaneous forms of communication. For acceptance by post, acceptance takes place when it is sent, but for acceptance by email, acceptance takes place when it is received by the offeror (Adams v Lindsell (1818) B & Ald 681; Entorres v Miles Far East [1955] 2 QB 327; David Baxter Edward Thomas and Peter Sandford Gander v BPE Solicitors (a firm) [2010] EWHC 306 (Ch)).

Unconditional assent means that the terms of the acceptance must exactly match the terms of the offer. If the two differ, this constitutes a counteroffer that the offeror can accept or reject. In a "battle of the forms" situation during negotiations of agreements between businesses, the last set of terms dispatched before acceptance generally prevail.

Consideration. Each party must receive some benefit and suffer some detriment. This benefit or detriment is known as consideration. A promise that is not supported by consideration is a gift and will only be enforceable under English law if it is made by deed (although promises not supported by consideration can be upheld in equity under the doctrine of promissory estoppel in certain circumstances). Consideration does not need to be adequate, but must come from the promisor and must not have been given in the past.

Intention to Create Legal Relations. An intention to create a legally binding agreement is presumed in commercial situations.

Certainty of Terms. The terms of the contract must be sufficiently certain so that it is objectively possible to determine exactly what the parties have agreed. Parties should ensure that no essential terms have been omitted and that there is no ambiguity or vagueness.

Unless specified in statute (for example, a legal mortgage must be in writing and executed as a deed to be enforceable), a contract does not need to be in a particular form. Contracts can be written, made orally or implied from the conduct of the parties. A contract made in electronic form, such as through email or on a website, is legally enforceable if it meets the substantive requirements (see above, Substantive Requirements).

English is most commonly used for contracts that are governed by English law. There is no specific language requirement for the validity of a contract and no translation requirement for contracts drafted in another language. However, for practical reasons, if a dispute regarding a contract drafted in another language is submitted to the English courts, a translation will most likely be required. The parties should consider how a translation may affect the meaning of any contractual terms.

English law does not impose any requirements in relation to price (such as the method or place of payment), leaving this to be agreed between the parties. If there are no provisions on price, there is an implied term that the buyer should pay a reasonable price (section 8, SGA).

Common methods of payment in commercial transactions include:

A letter of credit is a letter from an issuing bank to another bank (often a bank located in another country) assuring that the seller will receive payment from the buyer of the amount specified in the letter if the conditions of delivery are met. Most letters of credit now incorporate standard terms of the Uniform Customs and Practice for Documentary Credits.

A bill of exchange is an unconditional written order signed by one party ordering another party to make a payment to a specified third party (section 3, Bills of Exchange Act 1882). The bill can be payable on demand or at a future date, and the payee can transfer the bill by endorsing it and delivering it to the transferee.

A promissory note is an unconditional written promise to pay a specified sum of money to the other party (or to their order or to bearer) (section 83, Bills of Exchange Act 1882). A promissory note can be payable on demand or at a specified future date.

A banker's draft is a cheque for payment directly from the bank, rather than from the individual drawer's account. The advantage of a banker's draft is that the party depositing the draft does not need to wait for it to clear. With a normal cheque, the clearing process can take a few days and the cheque can bounce if the payer does not have enough money in their account. With a banker's draft, the bank has already verified that there was enough money in the payer's account. The parties must agree the currency in which the payments must be made.

Parties can include a contractual right to set-off. There are also four main rights of non-contractual set-off that may arise when there is no set-off clause in the contract:

Parties can choose to exclude or vary legal, equitable and banker's set-off in their contract. Parties cannot contract out of the rules relating to insolvency set-off, as these rules are mandatory and any attempt to do so will be void (Halesowen Presswork and Assemblies Ltd v National Westminster Bank Ltd [1972] AC 785).

Under the Reporting on Payment Practices and Performance Regulations 2017 and the Limited Liability Partnerships (Reporting on Payment Practices and Performance) Regulations 2017, all "large" companies and "large" limited liability partnerships (LLPs) must publish a report on payment practices and policies relating to "qualifying contracts" every six months for financial years starting on or after 6 April 2017. The report must include:

Companies and LLPs required to report under these Regulations are those which, on their last two balance sheet dates, exceeded at least two of the following thresholds:

A "qualifying contract" is a contract that meets the following criteria:

English law does not impose any requirements regarding the method or place of delivery of goods. Parties should agree these details between themselves. However, if no place of delivery is agreed, delivery takes place at the seller's place of business (section 29(2), SGA). The goods must be delivered within a reasonable time (section 29(3), SGA) and at a "reasonable hour" (section 29(6), SGA), to be determined with reference to relevant industry practices.

The seller must deliver the goods and the buyer must accept and pay for them, in accordance with the terms of the contract of sale (section 27, SGA). Acceptance occurs when the buyer either:

(Section 35, SGA.)

If the buyer has not previously examined the goods, it is not deemed to have accepted them until it has had a reasonable opportunity to examine them.

The parties can agree on particular packaging requirements in the contract. However, there is an expectation that the seller will package the goods in such a way that they do not get damaged in transit, and that it will bear the expense of doing so (section 29(6), SGA). The requirement for goods to be of satisfactory quality (section 14, SGA) extends to the packaging.

If the parties have not agreed otherwise, the following rules apply:

(Section 18, SGA.)

Retention of title (ROT) clauses are enforceable in the UK. To create a legally enforceable ROT clause, the seller must properly incorporate the ROT clause into the contract. The simplest way to do this is to include a ROT clause in a written contract.

Basic ROT clauses provide that the seller retain title to the goods, both legal and beneficial, until it has received full payment.

Under an all monies clause, the seller reserves ownership of the goods supplied until the buyer has paid not only for those particular goods, but also for any other goods supplied by the seller to the buyer, and has repaid all other monies owed to the seller, regardless of how that indebtedness arose. All the goods supplied, whether paid for or not, belong to the seller until the buyer has settled all invoices. There is some debate around whether an all monies clause creates a charge that must be registered at Companies House. It is therefore advisable to incorporate an all monies clause in a separate subclause, so that it can be severed from the basic ROT clause if it is held invalid by a court for lack of registration.

Under a proceeds of sale clause, where the goods supplied are to be sold on by the buyer, the seller can assert rights in the proceeds of sale to satisfy the price of the goods. This type of ROT clause creates a charge in favour of the seller, which will be void if it is not registered at Companies House within 21 days of its creation.

A mixed goods clause enables a seller who is selling goods for use in a manufacturing process during which it is mixed with other goods to assert rights of ownership in any new product resulting from the manufacturing process. Generally, for a ROT clause to be enforceable, the goods to which it relates must be identifiable. For this reason, this type of clause must be registered as a charge by the buyer in favour of the seller and will be void if not registered at Companies House within 21 days of creation.

If the goods are consumables that can be consumed during the credit period, and there is a credit period and a ROT clause, it is not a contract of sale within the scope of the SGA, so that the buyer is not afforded the protections available under the SGA ((1) PST Energy 7 Shipping LLC and (2) Product Shipping & Trading S.A. v (1) O.W. Bunker Malta Ltd and (2) ING Bank N.V. [2015] EWCA Civ 1058).

If the buyer resells the goods without first having paid for them and without the consent of the seller, the subsequent buyer does not acquire title. However, a buyer that is in possession of the goods with the seller's agreement can pass good title to a subsequent buyer who buys in good faith and without notice of the original seller's ROT (section 25, SGA).

If the parties have incorporated Incoterms® into their contract, the Incoterms® expressly provide for each type of contract (namely for FOB (free on board), CIF (cost, insurance and freight) and CFR (cost and freight) contracts) that the transfer of risk in relation to the goods passes to the buyer when the goods "pass the ship's rail".

If the parties have not incorporated Incoterms® or agreed otherwise, risk in relation to the goods passes to the buyer at the same time as title (section 20, SGA) (see Question 5). A seller seeking to retain title will not want to retain risk until title passes. In these circumstances, a well drafted contract will provide that risk passes on delivery, and that the buyer must insure the goods and note the seller's interest on the insurance policy.

In relation to the description and quality of the goods, the SGA implies that the goods must:

The implied terms will not apply where the buyer has had a defect specifically drawn to its attention, or in certain situations where a buyer examines the goods and the examination should have revealed a defect.

These implied terms have been replicated for consumer contracts in the CRA.

Parties can vary or exclude implied terms in their contract, subject to the:

Any exclusion or limitation clause must be properly incorporated into the contract and brought to the attention of the other party before or at the time of making the contract. It is not possible to exclude liability for fraud, and a party cannot exclude or restrict liability for death or personal injury resulting from negligence.

The seller will be liable under the contract if the product does not meet the terms of the contract and the buyer suffers loss or damage as a direct or foreseeable result. The general remedies under contract law are available to the buyer against the seller. If no primary producer can be identified, the supplier may become liable.

Consumers have additional protections against defective products under the CRA, including the following:

Under the General Product Safety Regulations 2005, producers and distributors must provide safe products to consumers. If a product is unsafe, the producer or distributor will be expected to take voluntary action to recall the product or otherwise remove the risk that they pose to consumers. If voluntary action does not remove the risk, enforcement authorities in the UK can issue a recall notice. There are various codes of practice applicable to product recalls, such as the Vehicle Safety Defects and Recalls Code of Practice.

Generally, a consumer who buys second-hand goods from a retailer or a professional trader has the same protections as when buying new goods. However, these protections do not apply when buying second-hand goods from a private seller.

The main remedy for breach of a sale of goods contract is damages. Damages are a monetary award to compensate the injured party and put them in the position they would have been in had the contract been performed in accordance with its terms. Damages are subject to the application of the rules on causation and remoteness, and to a duty to mitigate loss.

In claims for breach of a sale of goods contract, where the buyer fails or refuses to accept (and pay) for goods or where the seller fails or refuses to deliver goods, damages are generally assessed as at the time when the goods should have been accepted or delivered, based on the difference between the contract price and the market price at that time. In claims for defective goods, damages are generally based on the difference between the value of the goods as delivered and their value had they not been defective.

Equitable remedies may be available for breach of contract, but are only available at the discretion of the court. They include:

When a seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer can sue the seller for damages for non-delivery. Where a seller fails to deliver goods on time, a buyer can bring an action for damages for late delivery. This is in addition to the buyer's right to recover the price, if already paid.

The measure of damages is generally the loss (or estimated loss) resulting directly and naturally, in the ordinary course of events, from the seller's breach. This is normally based on the difference between the contract price and the market price at the time when the goods should have been delivered. When the goods are specific or ascertained, a buyer can apply for an order for specific performance. This is a discretionary remedy and will only be ordered when damages would not be an adequate remedy. Specific performance is generally allowed where the goods are of special significance or value, such as a unique work of art.

Where goods are delivered but are of unsatisfactory quality, a buyer may have a right to reject the goods and to recover the price. If there is a right to reject, any rejection of the goods must take place within a reasonable time from delivery. A buyer may also be able to claim damages for the cost of repair or replacement.

Where goods supplied by a seller are not as described or not fit for all the purposes for which the goods are commonly supplied, a buyer may, depending on the facts, have a right to either:

There is no general right to terminate the contract if the breach is so slight that it would be unreasonable for a buyer to reject the goods.

Where a buyer has either not paid or only partly paid for goods, the seller may have the following remedies, depending on the circumstances of the sale:

In the case of late payment under a business-to-business contract, the seller can claim late payment penalties and interest at a rate of 8% plus the Bank of England base rate under the Late Payment of Commercial Debts (Interest) Act 1998.

Exclusion clauses are enforceable under English law, subject to certain limits (for example, a party cannot exclude or restrict liability for death or personal injury resulting from negligence).

To be enforceable, an exclusion clause must be validly incorporated into the contract and cover the loss in question. The general rule is that reasonable steps must have been taken to bring the clause to the attention of the contracting party before or at the time the contract was made. Generally, the more onerous a clause, the more steps a party must take to bring it to the other party's attention and to include it in the contract. Statutory protection for consumers in this area was provided under the Unfair Terms in Consumer Contract Regulations 1999, which have now been replaced by the CRA. However, as the CRA is largely consolidatory, the rules remain unchanged.

Where a party enters into a contract with a consumer or on its written standard terms of business, that party cannot exclude or restrict its liability for breach unless the exclusion is reasonable. To be reasonable, a term must have been a fair one to include in the contract, having regard to the circumstances that were or should have reasonably been known by, or in the contemplation of, the parties when the contract was made.

A term that purports to exclude or restrict liability for a seller's implied undertakings as to title to goods is void. A term that purports to exclude or restrict liability in relation to a seller's implied obligation regarding conformity of the goods with description or sample, or their quality or fitness for a particular purpose, is void if either of the following apply:

A term that seeks to exclude liability for misrepresentation is also ineffective unless it is reasonable. It is not possible to exclude liability for fraudulent misrepresentation.

Key drafting rules that businesses should follow to maximise the enforceability of exclusion clauses include:

The English courts will generally recognise a choice of law in a sale of goods contract. Under the Rome I Regulation (593/2008), the primary principle is freedom of choice. Therefore, sale of goods contracts are usually governed by the law chosen by the parties (Article 3(1), Rome I). While the UK is no longer a member of the EU, Rome I has been incorporated into UK domestic law through the Non-Contractual Obligations (Amendment etc.) (UK Exit) Regulations 2019 (SI 2019/834).

However, the parties' choice of law cannot supersede any mandatory provisions of law or the mandatory rules of any other country to which the contract is connected (Article 7, Rome I). The English courts can also refuse to apply provisions of a chosen law that would be clearly incompatible with the public policy of the forum.

In certain consumer contracts, a choice of law must not deprive a consumer of the protection afforded to them by mandatory rules of the law of the country in which they are habitually resident. (Article 5(1), Rome I).

If the parties do not make a choice of law, the applicable law will be that of the country where the seller has its habitual residence (Article 4, Rome I).

If the seller is a company, the habitual residence will be the place of central administration. For a person acting in the course of business, habitual residence is the principal place of business (Article 19, Rome I). If habitual residence cannot be determined, the applicable law is that of the country with which the seller is mostly closely connected (Article 4(4), Rome I). However, all rules determining the law applicable to a contract can be disregarded if the contract is "manifestly more closely connected" with the law of a different country (Article 4(3), Rome I).

In most cases, the English courts will recognise and enforce a choice of foreign jurisdiction in a sale of goods contract.

As a result of the UK's withdrawal from the EU, the Recast Brussels Regulation (1215/2012) no longer applies to the UK. On 28 June 2021, the European Commission formally communicated its refusal to consent to the UK's application to accede to the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Lugano Convention).

The Hague Choice of Court Convention will therefore play a far more significant role than it did previously. The UK acceded to the Hague Choice of Court Convention in its own right on 1 January 2021, having previously been bound by virtue of its membership of the EU. There is a degree of uncertainty as to whether the UK is a contracting state for the purpose of jurisdiction agreements concluded between 1 October 2015 (when the EU acceded) and 1 January 2021. UK legislation provides that this is the case, but EU member state courts may not necessarily agree.

The Hague Choice of Court Convention requires the courts of contracting states to give effect to the jurisdiction provision set out in an agreement unless the agreement is null and void under the law of that state (Article 5, Hague Choice of Court Convention). The Hague Choice of Court Convention does not apply to jurisdiction agreements that designate the courts of a non-contracting state.

The jurisdiction agreement must be either in writing (or evidenced in writing) or in some other documented form that may be subsequently referred to. In contrast to the position under the Recast Brussels Regulation, it is not sufficient for the jurisdiction agreement to be in a form that accords with practices that the parties have established between themselves or by trade usage.

The Hague Choice of Court Convention does not, unlike the Recast Brussels Regulation, identify any specific categories of claims over which the courts of a particular contracting state will have exclusive jurisdiction, regardless of the choice of the parties.

The Hague Choice of Court Convention does not apply where the parties have not made a choice of jurisdiction. Therefore, the English courts will apply common law rules to ascertain whether they have jurisdiction over the contract. The English courts have jurisdiction if the defendant either:

If these criteria are not satisfied, the claimant must show that there is a good arguable case for English jurisdiction (for example, because the contract is subject to English law or the relief is sought in England or Wales).

Arbitration clauses are sometimes included in sale of goods contracts. Arbitral awards made in England and Wales can be enforced by summary procedure or action on the award for failure to comply with the award. All the methods available to enforce a court judgment can be used to enforce an arbitral award, including injunctions, damages and specific performance (section 66, Arbitration Act 1996).

The UK is a party to the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention). The English courts will therefore recognise and enforce foreign arbitral awards rendered in states that are party to the New York Convention, subject to only a few exceptions (for example, where a party to the arbitration agreement was under some incapacity or where recognition of the award would be contrary to public policy). The enforcement procedure is the same as for a judgment or order made by the courts of England and Wales (sections 100 to 103, Arbitration Act 1996).

Title to goods in storage is usually protected and evidenced by a document of title, a formal commercial document that proves the holder's ownership of the goods.

Negotiable documents of title can be transferred from one person to another by delivery or endorsement (signed on the back by the transferor named in the document), so that the holder of the instrument can sue on it in its own name. The document gives the buyer legal title free from any equities or defects of title of the transferor and any other prior holder of the instrument, provided that the buyer had no notice of any equities or defects in title before the transfer was made. Examples of negotiable documents are bills of exchange and promissory notes (see Question 3).

Non-negotiable documents of title cannot give a subsequent buyer better title than that of the transferor. If the document was stolen, the buyer cannot acquire the rights to the goods represented by the document, even if they did not know it was stolen. An example of a non-negotiable document is a bill of lading.

Warehouse receipts are not recognised as documents of title in the UK.

A warehouse receipt is a document issued by a storage company describing the goods held by it to the order of the person identified on the receipt. It is not considered to be a negotiable document of title under English law and therefore cannot itself be pledged. As such, there are no particular conditions or formalities that warehouse receipts must comply with. Lenders can however take a pledge over the goods to which the receipt relates. The lender will often keep the warehouse receipt as evidence of constructive possession of the goods.

Interests over goods in storage can be created by way of a pledge or charge. Pledges are more common. Under a pledge, ownership of the goods remains with the pledgor but the goods are transferred into the possession of the lender/pledgee as security for payment of a debt. For this reason, only items that can be delivered can be pledged. Once the debt has been paid, the pledgee returns the goods to the pledgor. However, if the pledgor does not pay, the pledgee can sell the goods to recover the debt. Generally, the lender/pledgee will take constructive rather than actual physical possession of the goods (for example, by placing the goods with a storage company that will have direct control and possession of the goods and hold them to the lender/pledgee's order).

A charge also provides security over goods for payment of a debt. However, unlike a pledge, a charge does not give the lender/chargee the right to possession. All fixed charges, mortgages and floating charges created after 6 April 2013 by a company registered in England and Wales must be registered at Companies House (Part 25, Companies Act 2006). The company must complete and submit a Form MR01 to Companies House within 21 days of the creation of the charge.

The UK gave notice of withdrawal from the EU on 29 March 2017, and subsequently left the EU on 31 January 2020. This began a transition period that ended on 31 December 2020. The European Union (Withdrawal Agreement) Act 2020 makes legal provision for ratifying the Brexit Withdrawal Agreement and implementing it into UK domestic law. At the end of the transition period, the UK-EU Trade and Co-operation Agreement started to apply on a provisional basis, and entered into force on 30 April 2021.