Contracts Case Study

Massie, Raymond 6/7/2019 For Educational Use Only

General Contract Clauses: Acceptance of Goods, Practical Law Standard Clauses...

© 2019 Thomson Reuters. No claim to original U.S. Government Works. 1

General Contract Clauses: Acceptance of Goods

by Practical Law Commercial Transactions

Maintained • USA (National/Federal)

A Standard Clause specifying the right of a buyer of goods under the Uniform Commercial Code (UCC) to accept or reject nonconforming or excess goods, including the buyer’s remedies. This Standard Clause has integrated drafting notes with important explanations and drafting and negotiating tips.

General Contract Clauses: Acceptance of Goods 1. Acceptance of Goods.

1.1 Buyer shall inspect the Goods [upon/within [NUMBER] days of] receipt (”Inspection Period”) of the Goods and

either accept or reject such Goods. Buyer may reject such Goods if:

(a) they do not conform to the [make/model number/UPC/SKU/[OTHER PRODUCT IDENTIFIER]] listed in the applicable Purchase Order, or on visual inspection, Buyer reasonably determines they do not conform to the warranties set forth in this Agreement (”Nonconforming Goods”). Where the context requires, Nonconforming

Goods are deemed to be Goods for purposes of this Agreement. (b) when counted together with all other Goods having the same [make/model number/UPC/SKU/[OTHER PRODUCT IDENTIFIER]] and received by Buyer under the same Purchase Order, they are in excess of the quantities of such Goods ordered under that Purchase Order (”Excess Goods”).

1.2 Buyer will be deemed to have accepted the Goods unless it notifies Seller in writing of any Nonconforming Goods or Excess Goods during the Inspection Period and furnishes such written evidence or other documentation as [reasonably] required by Seller. If Buyer timely notifies Seller of any Nonconforming Goods or Excess Goods, Seller shall determine, in its sole discretion, whether the Goods are Nonconforming Goods or Excess Goods. If Seller determines that the Goods are Nonconforming Goods or Excess Goods, it shall, in its sole discretion:

(a) if such Goods are Nonconforming Goods, (i) replace such Nonconforming Goods with conforming Goods, or (ii) refund the Price for such Nonconforming Goods, together with all shipping and handling expenses incurred by Buyer

Massie, Raymond 6/7/2019 For Educational Use Only

General Contract Clauses: Acceptance of Goods, Practical Law Standard Clauses...

© 2019 Thomson Reuters. No claim to original U.S. Government Works. 2

in connection therewith; or (b) if such Goods are Excess Goods, refund the Price for such Excess Goods, together with all shipping and handling expenses incurred by Buyer in connection therewith.

1.3 Buyer shall ship, at [its/Seller’s] expense [and risk of loss], the Nonconforming Goods or Excess Goods to Seller’s facility located at [LOCATION]. If Seller exercises its option to replace Nonconforming Goods, Seller shall, after receiving Buyer’s shipment of Nonconforming Goods, ship to Buyer, at [Seller’s/Buyer’s] expense [and risk of loss], the replaced Goods to [the Delivery Point/a location designated by Seller/[OTHER LOCATION]].

1.4 Buyer acknowledges and agrees that the remedies set forth in Section 1.2 and Section 1.3 are Buyer’s exclusive remedies for the delivery of Nonconforming Goods or Excess Goods[, subject to Buyer’s rights under [SECTION] with respect to any Nonconforming Goods for which Buyer has accepted delivery under this Section 1].