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Legal Terms Your Business Should Know When Working Sales

— January 26, 2023

By understanding these legal terms, businesses can protect themselves from potential disputes or misunderstandings.

When it comes to sales, there are a few legal terms that all businesses should be aware of and understand. These include express warranties, implied warranties, unconscionability, merchantability, and consideration.

Express Warranties

When operating a business, your sales plan should always be easy for you and your contractors to understand. There may be times when your company will need to use an express warranty, which refers to any promise or statement made by a seller about the quality or condition of the product being sold. An example of an Express Warranty would be a manufacturer offering a guarantee that their product will last for five years. A breach of warranty occurs if what was promised is not true.

Businesses should consider using express warranties when selling a product or service that has specific requirements for use, such as a warranty on an appliance or piece of equipment. An express warranty can also be used to ensure that the customer receives what they paid for and that it meets the standards specified in the sales agreement. Express warranties are important because they give customers peace of mind knowing that their purchase is covered by some form of guarantee. In addition, businesses may want to use them as a tool to build trust with potential buyers and encourage repeat business.

Implied Warranties

Implied warranties refer to guarantees given by law when buying certain products from a seller. For instance, if you buy a new car, it’s covered under an Implied Warranty which states that the vehicle must run and be fit for its intended purpose. Implied Warranties are important to ensure that customers receive what they purchased and that it meets the quality standards provided in the purchase agreement.


Man in white dress shirt with hand over mouth; image by KrakenImages, via
Man in white dress shirt with hand over mouth; image by KrakenImages, via

Unconscionability refers to an agreement or a term within a contract that is so unfair as to shock the conscience of a reasonable person. An example of unconscionability would be terms in a contract that force one party to always agree to their partner’s demands, no matter how unreasonable they may be. Businesses should avoid using unconscionable terms, as they can lead to expensive legal disputes down the line.


The doctrine of merchantability states that goods purchased must be fit for their intended purpose. This means that the goods must be of a certain quality and be able to function as expected. If a seller fails to provide goods that are merchantable, they may face liability under the doctrine of merchantability. Businesses should strive to provide customers with goods and services that are up to standards and meet their expectations.

An example of merchantability would be an electric appliance that fails to work as expected. Under the doctrine of merchantability, the seller is liable if they sold a product that was not fit for its intended purpose. This means that the appliance must have all necessary components and meet certain standards, such as being free from defects and able to function properly. The seller must also ensure that the customer receives adequate instructions on how to use the product, as well as information about any safety requirements or precautions.


The term “consideration” refers to something of value exchanged between parties in a contract. Considerations can include money, services, or other promises made by either party in order for an agreement to be valid. When entering into any type of contractual agreement, businesses should make sure both sides are getting something out of it-otherwise, the transaction is not legally binding.

By understanding these legal terms, businesses can protect themselves from potential disputes or misunderstandings down the line. Having a strong grasp of the legal aspects of sales will enable businesses to create sound agreements and ensure that both sides are getting what they agreed upon. By familiarizing yourself with these legal terms, you’ll be able to make sure your contracts are legally binding and compliant with all relevant laws.

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