The "sales contract" is one of the most common types of contracts in commercial activities, and it is also an important evidence for judicial authorities to handle contract dispute cases. Trial practice has proven that non-standard conclusion of sales contracts is the main reason for disputes.

So, what should a "perfect sales contract" look like in the eyes of a judge? Let's take a look together!

1. The title of the contract should be written correctly

It is important to clarify the relationship between the two parties in the sales contract. With the development of the economy, customers have more personalized customization needs for products, especially in the fields of decoration and furniture purchase. There is often a situation where the elements of "contracting contract" and "sales contract" compete.

Article 787 of the Civil Code of the Civil Code of the People's Republic of China stipulates: "The ordering party can terminate the contract at any time before the contractor finishes the work, and if it causes losses to the contractor, it shall compensate for the losses." This provision gives the ordering party the right to unilaterally terminate the contract, and the contractor's losses are often difficult to fully prove, which makes it difficult for the "seller" to safeguard its legitimate rights and interests when the "buyer" breaches the contract.

If the contractual relationship between the two parties is not clear, the judicial authority needs to determine the nature of the contract between the two parties through the specific circumstances of the contract. If the contract title is clear and the contract terms further clarify the contractual relationship, it can to some extent avoid differences between the two parties on this issue.

So in the title, it is recommended to use words such as "buying and selling" and "purchasing and selling" as much as possible to avoid elements such as "processing", "customization", and "contracting".

2. The contract terms should be complete

Article 596 of the Civil Code of the Civil Code of the People's Republic of China stipulates that: "The contents of a sales contract generally include the name, quantity, quality, price, time limit for performance, place and method of performance, packaging method, inspection standard and method, settlement method, words used in the contract and its validity, etc."

Therefore, contract terms can be fully or partially compiled by referring to legal provisions. The more detailed and detailed the contract terms are, the lower the probability of disputes between the two parties in various situations.

3. The main body of the contract should be clear

The terms "buyer" and "seller" are colloquial expressions in law for "buyer" and "seller". Clarifying the subject of a contract is a prerequisite for clarifying the rights and obligations of both parties in the contract. Therefore, when signing a contract, both parties should pay attention to the names of the buyer and seller, preferably in the form of contract terms, and ensure consistency with the signing and stamping of the contract.

4. The description of the subject matter of the contract should be as detailed as possible

In judicial practice, there are many cases where disputes arise due to unclear goods. When entering into a contract, the product name, model, quantity, appearance, and size should be clearly stated and written in detail as much as possible. It is best for non industry individuals to read the name of the subject matter without ambiguity. If the name and model of the goods are not clear enough, sample photos can be attached when making the contract.

5. The quality/technical standards of the subject matter should be clear

After clarifying the subject matter, the quality/technical standards of the subject matter of the sales contract should also be clarified. If there are multiple product quality/technical standards for some goods, the buyer and seller should clearly agree on the standards for the subject matter of the contract, so that after the subsequent delivery of the subject matter, both parties have evidence to rely on when the buyer fulfills their inspection obligations.

6. The performance period and location should be clear

The performance period refers to the delivery period, and the seller shall deliver the subject matter at the agreed time. If the delivery deadline is agreed upon, the seller may deliver at any time within that delivery deadline.

Regarding the deadline for performance, the parties can freely negotiate, and either party must abide by the contract agreement. If one party fails to fulfill its delivery or payment obligations after the expiration of the performance period, it shall be liable for breach of contract.

But it is not only the party who fails to fulfill its contractual obligations after the expiration of the performance period that is liable for breach of contract. Before the expiration of the performance period, if either party clearly indicates or expresses through their own actions that they will not perform their contractual obligations after the performance period arrives, they shall also bear the liability for breach of contract as "expected breach of contract".

The place of performance is not necessarily equivalent to the place of delivery of the subject matter, and it is recommended to agree through contract terms.

Firstly, the seller should deliver the subject matter at the agreed location and try to avoid inconsistency between the consignee and the buyer. If it is agreed in advance that the goods will be received by a third party, it is best to indicate it when signing the contract. If the seller discovers a discrepancy between the consignee and the buyer during delivery without prior agreement, it is best to confirm with the buyer by leaving a certificate before delivering the goods.

Secondly, it is clearly agreed that the "place of performance of the contract" is located in a certain place, which can not only win the jurisdiction of the local court for oneself, but also reduce the possibility of future jurisdictional objections.

7. The "inspection period" (the buyer's inspection notification obligation) should be stipulated

In judicial practice, there are many cases where the seller claims payment and the buyer raises quality objections, resulting in disputes. In addition to the need for clear quality/technical standards mentioned earlier, unclear agreements on the "inspection period" are also a major factor in disputes.

For defects that can be directly discovered by the buyer after receiving the goods, that is, the goods delivered by the other party "do not comply with the agreement" during risk transfer, such as quantity shortage, model inconsistency, color error, etc., the buyer may refuse to sign for the goods and shall inspect and notify the seller at the time of receipt. If no timely notice is given and the buyer has signed for the goods on the receipt indicating the variety, quantity, specifications, etc., it shall be deemed that the buyer has inspected the quantity and appearance defects, unless there is relevant evidence to refute it.

For the "hidden defects" that the buyer cannot discover in a timely manner after receiving the goods, their obligation to notify and inspect is limited by the double exclusion period. They not only require the buyer to notify the seller within a reasonable period from the date of discovery or should have discovered the defects, but also require notification within 2 years from the date of receipt of the goods. However, if there is a quality assurance period for the goods, the quality assurance period shall apply, and the 2-year rule shall not apply.

Therefore, it is best to clearly state the buyer's inspection notice period when drafting the contract. If the buyer claims any appearance defects from the seller beyond this period, the seller may refuse to bear the liability for breach of contract.

8. Termination of Contract Agreement and Legal Termination

The parties to the contract may agree on the reasons for terminating the contract. When the cause for termination of the contract occurs, the person with the right to terminate the contract may terminate the contract. If no agreement is made, the relevant provisions of Article 563 of the Civil code shall apply to the legal termination of the contract.

Article 563 of the Civil Code of the Civil Code of the People's Republic of China

In any of the following circumstances, the parties may terminate the contract:

（1） Due to force majeure, the purpose of the contract cannot be achieved;

（2） Prior to the expiration of the performance period, one party clearly indicates or indicates through their own actions that they will not perform the main obligation;

（3） Either party delays in fulfilling its main obligation and fails to fulfill it within a reasonable period after being urged to do so;

（4） Either party delays in fulfilling its obligations or commits other breach of contract, resulting in the inability to achieve the purpose of the contract;

（5） Other situations stipulated by law.

For an indefinite contract with continuous performance of debts as its content, the parties may terminate the contract at any time, but shall notify the other party before a reasonable period.

Additionally, it should be noted that if the right to terminate the contract is not exercised through litigation or arbitration, the parties need to notify the other party, and the contract will be terminated upon receipt of the notice; If the notice specifies that the defaulting party fails to fulfill its obligations within a certain period of time, the contract shall be automatically terminated. If the defaulting party fails to fulfill its obligations within that period, the contract shall be terminated upon the expiration of the period specified in the notice.

9. The agreement on liability for breach of contract should be clear

The agreement on liability for breach of contract is not only a means of constraining the performance of the contract by both parties, but also a basis for the non breaching party to claim their legitimate rights in the event of a breach of contract.

The setting of liability for breach of contract can be negotiated by both parties, and as long as it does not violate legal provisions, it is valid. For example, the defaulting party may be required to bear the actual performance, take remedial measures, pay liquidated damages, use deposit penalties, compensate for losses, request a reduction in price or remuneration, etc.

If the agreed penalty for breach of contract is excessively higher than the losses caused, the people's court or arbitration institution may reduce it appropriately at the request of the parties. If the liquidated damages agreed upon by the parties exceed 30% of the losses caused, they can generally be deemed to be excessively higher than the losses caused.

10. Format terms should fulfill the obligation of prompt explanation

In the process of signing a sales contract, the advantageous party will provide a format clause contract, which is a contract that is pre drafted for reuse and not negotiated with the other party at the time of signing the contract.

Firstly, the format clauses of the contract should follow the principle of fairness to determine the rights and obligations between the parties. Furthermore, if there is a situation where one's contractual obligations are significantly reduced or the other party's contractual obligations are increased, reasonable measures should be taken to remind the other party to pay attention. If the obligation of prompt explanation is not fulfilled, the other party may claim that the clause does not become part of the contract.