The terms and conditions of sale are the binding contract between a buyer and a seller, setting out when the deal becomes final, how payment and delivery work, what warranties apply, how far either side’s liability can reach, and where any dispute has to be resolved. Most of what fills these documents comes from the Uniform Commercial Code, which every state except Louisiana has adopted for the sale of goods. Where the written agreement is silent, the UCC supplies the default rule. Knowing what each clause actually does is how you spot an unfavorable term before you agree to it.
When the Contract Actually Forms
Many sellers write their terms to say that placing an order does not guarantee the seller will accept it. That phrasing matters because the UCC lets a contract form in any way that shows both parties agreed, including by the seller simply shipping the goods after receiving an order.1Legal Information Institute. Uniform Commercial Code 2-206 – Offer and Acceptance in Formation of Contract A seller who ships what you ordered has accepted. A seller who ships the wrong item has also accepted, unless they tell you promptly that the shipment is only an accommodation.
Terms of sale often override those defaults. Some say the contract forms when the seller sends an order confirmation. Others say it forms only when the goods ship. The distinction decides who is locked in. If the contract forms at confirmation, the seller is bound at the listed price even after discovering a pricing error. If it forms at shipment, the seller can cancel any time before the package leaves the warehouse. Reading this clause tells you how firm the commitment is on each side.
A sales contract can still hold up when both sides leave details open, as long as they clearly intended a deal and there is enough information to work out a remedy if something goes wrong. A short email exchange confirming quantity and price can be as enforceable as a long purchase order.
Payment and Pricing
The pricing clause identifies the total cost, the currency, and whether taxes and duties are included or added at checkout. Sales tax is the biggest domestic variable. After South Dakota v. Wayfair, states can require an out-of-state seller to collect sales tax once the seller crosses a revenue or transaction threshold in that state, even without any physical presence there.2Supreme Court of the United States. South Dakota v. Wayfair, Inc., 585 U.S. 162 (2018) For cross-border sales, the terms should state who pays import duties and customs fees, since those costs can be substantial and the dispute will otherwise land at the border.
Payment Terms and Late Fees
Business-to-business sales commonly use net payment terms. Net 30 means the full amount is due within 30 days of the invoice date. To discourage overdue accounts, most terms include a late payment provision. Monthly interest of 1% to 1.5% on the outstanding balance is common in commercial agreements, though state usury laws cap how high that rate can go. Some agreements also charge a flat fee per late payment or shift collection costs to the delinquent buyer. A seemingly small monthly rate compounds quickly over several months of nonpayment, so the late-fee clause is one of the first places to look.
Some sellers pass along credit card processing costs through a surcharge. Card network rules cap these surcharges and ban them on debit and prepaid cards, and the surcharge has to be disclosed at the point of sale, on receipts, and through posted signage. Several states restrict or ban credit card surcharges outright, so the clause varies by location.
Shipping, Delivery, and Risk of Loss
The shipping clause does more than estimate when the order arrives. Its real job is to fix the moment ownership and risk transfer from seller to buyer. Under the UCC, title passes when the seller finishes the delivery obligation.3Legal Information Institute. Uniform Commercial Code 2-401 – Passing of Title Reservation for Security Limited Application of This Section What that looks like in practice depends on how the contract is structured.
In a shipment contract, often labeled “FOB Shipping Point,” ownership transfers when the seller hands the goods to the carrier. From that moment, the buyer bears the risk if the package is lost, stolen, or damaged in transit. In a destination contract, “FOB Destination,” the seller keeps the risk until the goods arrive at the buyer’s location. The difference can mean thousands of dollars on a single shipment, and most consumer e-commerce terms default to shipment contracts without flagging it.
When Something Goes Wrong in Transit
Risk of loss gets more complicated when someone breaches. If the seller ships non-conforming goods, the risk stays with the seller until the problem is fixed or the buyer accepts the shipment anyway.4Legal Information Institute. Risk of Loss If the buyer backs out of a deal for conforming goods already set aside for the order, the seller can treat risk of loss as resting on the buyer for a commercially reasonable time, at least to the extent the seller’s own insurance falls short. These defaults apply unless the terms override them.
Most terms also specify packaging standards and inspection deadlines. Sellers commit to reasonable packaging, and buyers are expected to inspect for visible damage on arrival. Signing for a delivery without noting damage on the carrier’s receipt can forfeit your ability to hold the seller or carrier responsible later. Estimated delivery timelines are almost always described as approximations, which shields the seller when the carrier runs late.
Federal Rules for Remote and Door-to-Door Sales
For purchases made online, by phone, or through the mail, federal regulation sits on top of whatever the seller’s terms say. These rules exist because remote buyers can’t inspect goods before paying and have limited leverage after the money leaves their account.
The Mail, Internet, or Telephone Order Rule
The FTC’s merchandise rule requires sellers to have a reasonable basis for any shipping timeline they advertise. If the seller makes no shipping promise, the default deadline is 30 days from the date the seller receives a properly completed order.5Federal Trade Commission. Business Guide to the FTC’s Mail, Internet, or Telephone Order Merchandise Rule When a new credit account is being opened to pay for the order, the window extends to 50 days.6eCFR. 16 CFR Part 435 – Mail, Internet, or Telephone Order Merchandise
If the seller learns it can’t ship on time, it must notify the customer and offer the option to cancel for a full refund. Silence from the customer can be treated as consent to a single delay of up to 30 days, but any further delay requires affirmative agreement. A seller that fails to ship and fails to get consent for the delay must issue a prompt refund without being asked, meaning seven working days for cash or check payments, or one billing cycle for credit card charges.6eCFR. 16 CFR Part 435 – Mail, Internet, or Telephone Order Merchandise
The Cooling-Off Rule
The FTC’s Cooling-Off Rule gives buyers a three-business-day cancellation right on certain in-person sales made away from the seller’s permanent store, including sales at your home, workplace, hotel rooms, convention centers, or fairgrounds. The window closes at midnight of the third business day, and Saturday counts. The rule does not cover sales under $25 at your home, sales under $130 at temporary locations, purely online or mail-order purchases, or transactions involving real estate, insurance, or securities.7Federal Trade Commission. Buyer’s Remorse: The FTC’s Cooling-Off Rule May Help
The INFORM Consumers Act
Online marketplaces have their own disclosure duties. Under the INFORM Consumers Act, a marketplace must collect and verify identity and tax information from any high-volume third-party seller, defined as one with 200 or more sales and at least $5,000 in gross revenue in any 12-month window over the previous two years. For sellers crossing $20,000 in annual gross revenue on a platform, the marketplace must display the seller’s business name, physical address, and working contact information on the product listing page or in order confirmations.8Office of the Law Revision Counsel. 15 USC 45f – Collection, Verification, and Disclosure of Information by Online Marketplaces That is why a third-party seller’s contact details now appear on major marketplace listings.
Returns and Refunds
No federal law forces sellers to accept returns on goods that match what was ordered. Return policy is almost entirely a matter of contract, so the terms of sale are the only place to find out what your options are. Most retailers offer a return window of roughly 14 to 30 days after delivery, though some extend that to 90 days or more for loyalty members.
Qualifying for a return usually means keeping the item in its original packaging with no signs of use. Many sellers require a Return Merchandise Authorization number before processing the return, and shipping an item back without one can result in rejection at the warehouse. Return shipping usually falls on the buyer unless the item was defective or the seller made a fulfillment error.
Refunds may come back to the original payment method, as store credit, or as an exchange. Restocking fees of roughly 10% to 20% of the purchase price are common, especially on electronics and large appliances. States vary on whether restocking fees have to be disclosed before the sale. As a general rule, if the return policy is not posted conspicuously at the point of sale or on the website before checkout, the seller may struggle to enforce restrictive terms against the buyer.
Warranties and Disclaimers
Warranty provisions do some of the heaviest lifting in a terms-of-sale document. The UCC creates two implied warranties that attach automatically to every sale by a professional merchant unless the contract specifically disclaims them.
Implied Warranty of Merchantability
The implied warranty of merchantability means the goods must be fit for the ordinary purpose someone would buy them for.9Legal Information Institute. Uniform Commercial Code 2-314 – Implied Warranty Merchantability Usage of Trade A toaster that catches fire the first time you plug it in fails this standard. The warranty applies when the seller regularly deals in goods of that kind. It does not apply to private, one-off sales between individuals.
Implied Warranty of Fitness for a Particular Purpose
A separate warranty arises when the seller knows you need the product for a specific purpose and you are relying on the seller’s expertise to pick the right one.10Legal Information Institute. Uniform Commercial Code 2-315 – Implied Warranty Fitness for Particular Purpose If you tell a paint supplier you need a coating that will hold up in saltwater and the supplier recommends a product that peels off within a month, the fitness warranty is broken even if the paint would have been fine on an interior wall.
How Sellers Disclaim Implied Warranties
Sellers can disclaim the implied warranty of merchantability, but the disclaimer must specifically use the word “merchantability” and, if written, must be conspicuous, meaning printed so a reasonable person would actually notice it. To disclaim the fitness warranty, the exclusion must be in writing and conspicuous, though no magic words are required. Phrases like “as is” or “with all faults” disclaim all implied warranties at once, provided the buyer’s attention is drawn to the exclusion.11Legal Information Institute. Uniform Commercial Code 2-316 – Exclusion or Modification of Warranties
These disclaimers are common, often buried under a heading like “Disclaimer of Warranties” in all-caps text. On expensive equipment or materials where performance matters, check whether the seller has disclaimed implied warranties. An “as is” sale means you accept whatever you get, with almost no legal recourse if the product fails.
Federal Limits on Warranty Disclaimers
The Magnuson-Moss Warranty Act adds an important restriction for consumer products. If a seller offers any written warranty on a consumer product, it cannot disclaim implied warranties. The seller can limit the duration of implied warranties to match the written warranty, but only if the limitation is reasonable and prominently displayed. The same restriction kicks in if the seller offers a service contract within 90 days of the sale.12Office of the Law Revision Counsel. 15 USC 2308 – Implied Warranty Restrictions on Disclaimers or Modifications
The Act also requires that written warranty terms be made available to the consumer before the sale.13Office of the Law Revision Counsel. 15 USC 2302 – Rules Governing Contents of Warranties In a physical store, that means displaying the warranty near the product or making it available upon request with posted signage. For online or catalog sales, the seller must either include the full warranty text or tell the buyer how to request a free copy.14Federal Trade Commission. Businessperson’s Guide to Federal Warranty Law A number of sellers fail this requirement, which gives the buyer leverage in a warranty dispute.
Limitation of Liability
Separate from warranties, most terms of sale cap how much the buyer can recover if something goes wrong. The standard approach caps total liability at the purchase price of the goods and excludes indirect losses like lost profits, business interruption, and data loss. These limits are legal under the UCC, which allows parties to limit or exclude consequential damages.15Legal Information Institute. Uniform Commercial Code 2-719 – Contractual Modification or Limitation of Remedy
One hard boundary: excluding consequential damages for personal injury caused by consumer goods is presumed unconscionable and will not hold up.15Legal Information Institute. Uniform Commercial Code 2-719 – Contractual Modification or Limitation of Remedy For commercial losses between businesses, courts are far more willing to enforce the caps. If you are a business buyer purchasing a component that will go into your own product, a liability cap at purchase price means you absorb the entire downstream cost of a failure. That risk is worth negotiating before signing.
Force Majeure and Performance Excuses
Force majeure clauses cover what happens when an extraordinary event prevents performance. Natural disasters, wars, pandemics, government shutdowns, and severe supply chain disruptions are the usual triggers. Without this clause, a seller who cannot deliver on time is in breach. With it, performance is excused or delayed, provided the event was genuinely beyond the seller’s control.
Even without a force majeure clause, the UCC provides a safety net. Under the impracticability doctrine, a seller is excused from timely delivery when performance becomes impracticable due to an event neither party anticipated at signing.16Legal Information Institute. Uniform Commercial Code 2-615 – Excuse by Failure of Presupposed Conditions The bar is high. A price increase alone does not qualify unless it fundamentally changes the nature of the obligation. A general market downturn is a normal business risk, not an excuse.
When an event partially impairs the seller’s ability to deliver, the seller must allocate remaining production fairly among its customers and notify each buyer promptly of the expected delay and the estimated quantity available.16Legal Information Institute. Uniform Commercial Code 2-615 – Excuse by Failure of Presupposed Conditions Notification is not optional. A seller that goes silent during a disruption and then claims force majeure later has a much harder time defending that position. Many written force majeure clauses tighten these requirements further, specifying the exact number of days within which notice must be given and what documentation the affected party must provide.
Governing Law and Dispute Resolution
Every set of terms designates which jurisdiction’s laws will control interpretation. A company headquartered in Delaware might specify Delaware law. A separate forum selection clause names the physical location where lawsuits must be filed. Together, these clauses stop a buyer in one state from dragging the seller into an unfamiliar court across the country.
Arbitration and Class Action Waivers
Many terms require disputes to go through binding arbitration instead of court. The arbitrator’s decision is final, typically private, and extremely difficult to appeal. From the seller’s side, arbitration is faster and cheaper than litigation. From the buyer’s side, it eliminates a jury trial and limits discovery, which can make it harder to build a case.
Class action waivers often ride along with arbitration clauses, blocking buyers from joining together to pursue shared claims. These waivers are generally enforceable in commercial agreements, though they have drawn significant pushback in the consumer context.
Entire Agreement and Severability
Near the end of most terms you will find an “entire agreement” clause, sometimes called a merger or integration clause. Its purpose is simple: the written document is the complete deal, and no prior emails, phone conversations, or verbal promises are part of the contract. If a salesperson promised you a discount that never made it into the final document, this clause is designed to make that promise unenforceable.
A severability clause works as insurance for the contract itself. It says that if any single provision is found illegal or unenforceable, the rest of the agreement survives. Without it, striking down one problematic term could void the entire contract, leaving both parties without a governing agreement at all.