What Is a Retail Contract?

Retail contracts outline the terms and conditions of a sale between a supplier and a retail store or a sale between a retail store and a customer. Although each type is an example of a purchase agreement and, just as with any other type of contract, are legal and binding once the contract is signed, clauses and inclusions vary depending on whether the retail store is the buyer or seller.

A business-to-business retail contract, also commonly called a retail agreement, most often takes the form of a standard purchase contract. A business-to-consumer retail contract, however, can exist as a standard or installment retail sale agreement. Regardless, businesses in most states must comply with state-mandated Uniform Commercial Code regulations, which require a retail contract to be included in the sale of goods valued at $500 or more when at least one of the parties fits the legal description of a merchant. A merchant, according to the UCC, is “any seller who regularly sells similar items or any buyer who regularly buys similar items.”

Although retail contracts vary according the parties involved and the item being purchased, all must include specific information to make the contract legally valid. For example, a basic retail contract should include identification and contact information for both the buyer and seller, a description of the item or items, price and quantities involved and the date of the agreement. In addition, the terms of the sale and any other conditions or requirements should be included. Information as to whether the contract can be amended or revised in the future -- such as in the event the buyer wants to return the merchandise -- is also an essential component.

Business retail contracts often vary considerably from consumer contracts in the terms and conditions contract sections. For example, many include discount terms, such as a discount off the list price, straight discounts and all-unit discounts based on purchase quantities. Straight discounts are a percentage discount applying to items purchased above a standard minimum. All-unit discounts also have a minimum ordering quantity but differ from a standard discount in that once an order exceeds the minimum the discount applies to the entire order. In addition, clauses may allow the contract to be amended or revised in the event the retailer can’t move the items.

Consumer retail contracts are subject to federal and state consumer protection laws as well as UCC regulations. Consumer protection laws are built into the contract and, except when it comes to returning usable and non-defective merchandise, generally side with the customer. For example, consumer protection laws may regulate how a business must format a retail contract, regulate certain clauses, such as a payment acceleration clause or an anti-litigation clause for resolving disputes the contract may not contain, and must pass a reasonableness test with regard to pricing and terms of the contract. While a retailer doesn’t have a legal obligation to allow the customer to return non-damaged items, contract terms must provide a window of time to cancel the retail contract and return certain items. While state laws that define these items may vary, they generally include cars, insurance policies and credit repair services.