CHAPTER 3
Parties to the Transaction, Part 1 occur between two parties: buyer and seller. Sometimes transactions involve more than several parties who are jointly buying or selling goods, but the individual interests of parties acting jointly become melded as a single interest in the sales contract. Thus, for purposes of the sales contract, there is a buyer and a seller. In addition, the buyer and seller may each be represented by legal counsel. Other interests of third persons, and the individual interests of parties acting jointly, are not directly controlled by the sales contract between buyer and seller. These outside interests may be indirectly affected by whether the buyer and seller perform the sales transaction to the letter of the sales contract, but generally the rights and risks of these third persons and individual parties depend on contracts separate from the sales agreement. Thus, if parties are acting jointly in a sale of goods, the goods are shipped and accepted by the buyer, the buyer makes payment pursuant to the contract terms, but one of the sellers absconds with the payment, the other seller’s recourse is against the absconding party for breach of their joint arrangement, not against the buyer for a second payment. Similarly, if a buyer in a sales transaction in turn promises to sell the goods to a third-party retailer by a certain date, the retailer then arranges to resell those goods accordingly, but the goods are delivered two months late and the resales are lost, the third party’s recourse is against the buyer. Of course, the buyer (but not the third-party retailer) may also have recourse against the seller for damages caused by the late delivery.
SALES TRANSACTIONS
T I P : If you ask legal counsel for further explanation of this concept, you are likely to
hear the term “privity of contract” bandied about, i.e., the rights of the third party are not protected because he or she is not in privity of contract. This simple term is a shorthand expression for a fairly complex set of legal rules derived from English common law to determine who may enforce contractual rights. The very basic answer is: any person who is directly a party to the contract. Whether a third party has a right to enforce the contract is an issue best left to the advice of your attorney in light of the particular circumstances involved.
Buyer THE BUYER AS CONSUMER
A buyer consumes goods or services in return for compensation to the seller. The buyer may be in the middle of the consuming chain, in which case goods or services are purchased and resold to other buyers who in turn consume or utilize them to produce other goods or services, which may then be sold to other buyers. Alternatively, the buyer may be the ultimate consumer, who uses the goods or services without selling them to other buyers.
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