A sales contract is any contract between a buyer and a seller where the seller agrees to provide a certain product or service and the buyer agrees to provide some type of payment. Once both parties sign, the contract is legally binding, and the customer may sue if the terms described in the contract are not carried out. Sales contracts are common, and it is worthwhile for California residents to understand how they work.

Breaching a sales contract can occur in a variety of ways. If the product provided does not match the description in the contract, that is considered a breach. If a service is provided, then the service must match the description, and providing a different service would constitute a breach. The seller must also follow through on service agreements, such as promised warranties. These are considered material breaches because they go against the core intention of the contract.

When a breach does occur, the buyer generally has the right to sue the seller for either general or consequential damages. General damages are more common and constitute any loss to the customer, such as damage to property or the cost associated with replacing a defective or incorrect product. If the breach caused an injury, the buyer may sue for consequential damages to cover the costs of their injuries.

An attorney can assist a client with the business litigation involving sales contracts. They may be able to head off a lawsuit by helping a client draft the contract with an arbitration clause that prevents either party from suing the other. If a breach does occur, they can help represent the client in court or could help to reach a settlement out of court.

Source: Houston Chronicle, “What Can Happen if You Breach a Sales Contract?“, Lee Nichols, December 08, 2014