Sales agreement checklist: inspection, risk transfer and non-conformity liability
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A sales agreement is one of the most basic contract types in business, used for buying equipment, transferring inventory or sourcing machinery, which is exactly why review sometimes gets treated lightly. The recurring trouble spots are how precisely the goods are identified, when delivery, acceptance and title transfer actually happen, who bears the risk of accidental loss, and how long non-conformity liability runs.
Identifying the goods precisely
A description like "machinery, one set" invites disputes later about what was actually owed. Specifications, model numbers, quantities, accessories and spare parts should be spelled out in the contract or an exhibit, especially for used equipment, custom-built items, bulk inventory transfers or goods bundled with software or installation work.
Aligning delivery, acceptance and title transfer
Delivery, acceptance and title transfer do not always occur at the same moment, and which triggers which changes the risk each party carries. Review should fix the delivery method and location, the acceptance period, what happens on rejection, whether silence counts as deemed acceptance, and whether title passes on delivery, on payment or on acceptance.
Risk of loss
Risk allocation determines who absorbs damage that occurs through no one's fault, such as goods damaged in transit. Because risk is often tied to delivery, acceptance or title transfer, review should check exposure during transit and installation, before acceptance, and during any delay in the buyer taking receipt, along with whether insurance is in place.
Non-conformity liability
Under Japan's non-conformity liability framework, a buyer whose goods do not conform in kind, quality or quantity may seek cure, price reduction or termination. Review should separate the notice period from the liability period, confirm what remedies are available and in what order, and check for seller exclusions tied to the buyer's handling or storage.
Reading the contract from each side
Buyers tend to focus on receiving what was expected and being able to act on defects found after acceptance; sellers tend to focus on keeping warranties bounded and acceptance from dragging out payment. The same clause reads differently depending on which side is negotiating, so comments should reflect the client's actual position and supply relationship. Where sales recur rather than happening once, the agreement's relationship to any basic transaction agreement should be checked as well, along with issues like price revision or minimum quantities.