If you sell products in New South Wales (or buy stock from NSW suppliers), you’ve probably come across disputes that sound like this:
- “The goods weren’t what I ordered.”
- “They were defective, so I want a refund.”
- “You delivered late and it cost me sales.”
- “Risk passed to you when we shipped it.”
These issues often fall under a mix of contract law, the Australian Consumer Law (ACL), and (for many business-to-business transactions) the Sale of Goods Act 1923 (NSW).
Even though many business owners think of it as a “consumer law” issue, the Sale of Goods Act is really about the legal rules that apply when goods are sold under a contract-especially where the ACL doesn’t apply, or where your contract is silent on key points.
Below, we’ll walk through what the Sale of Goods Act (NSW) covers, how it works in practice in 2026, and how you can reduce risk with the right terms, processes, and documentation.
What Is The Sale Of Goods Act (NSW) And When Does It Apply?
The Sale of Goods Act 1923 (NSW) sets out rules for contracts where “goods” are sold and bought. It covers things like:
- how a sale contract is formed
- when ownership (title) passes from seller to buyer
- when risk passes (who wears loss or damage)
- implied terms (automatic promises) about quality, fitness, description, and title
- what remedies are available if something goes wrong
In simple terms: if you have a contract for selling goods in NSW, the Act may “fill the gaps” where your contract doesn’t spell everything out.
What Counts As “Goods”?
“Goods” generally means tangible, moveable items (like stock, equipment, furniture, food products, electronics, and materials). It usually does not include land, and it doesn’t operate the same way for pure services.
Some agreements are mixed (goods + services), like installation supply contracts. In these cases, which laws apply can depend on what the contract is really for, and how it’s structured.
Does It Apply To Consumer Sales Or Business Sales?
It can apply to both, but in practice:
- Consumer transactions are often primarily governed by the ACL (including consumer guarantees).
- Business-to-business (B2B) transactions often rely heavily on the contract terms, and the Sale of Goods Act can be a key “default rulebook” if terms are missing or unclear.
One of the most important early questions is whether your customer is legally a “consumer” under the ACL, which isn’t always obvious from the label “business customer”. The definition can capture business purchases in some situations, depending on the goods and price. The definition of a consumer is a useful starting point when you’re deciding what rules and remedies might apply.
Why People Say “2021” (And What “Updated 2026” Means)
You’ll sometimes see people refer to “Sale of Goods Act NSW 2021” in blogs or guides because they’re talking about the Act as it was accessed or applied around that time.
The legislation itself is the Sale of Goods Act 1923 (NSW). What matters for your business is how it operates as in force now, and how NSW courts interpret it today (including alongside the ACL and modern contracting practices like online ordering and email acceptance).
How Sale Of Goods Contracts Are Formed (And Why Your Paper Trail Matters)
A sale of goods contract can be formed in many ways. It might be:
- a signed supply agreement
- terms and conditions attached to a quote
- an online checkout flow
- an email chain confirming quantity, price, and delivery
- a purchase order accepted by a supplier
The “classic” legal ingredients are still the same: offer, acceptance, consideration (something of value), intention, and certainty of terms.
Are Emails And Purchase Orders Legally Binding?
Often, yes. If the essential terms are agreed and the parties intend to be bound, an email acceptance (or a “confirmed” purchase order) can form a contract.
This is why it’s so important to treat written communications like contract documents, especially in B2B supply chains. If you want a deeper explanation, is an email legally binding is a common question-and it matters a lot when disputes arise about what was agreed.
Practical Tip: Identify Your “Contracting Documents”
Many disputes happen because each side thinks different documents control the deal (for example, the buyer thinks the purchase order terms apply, while the seller thinks their invoice terms apply).
To reduce confusion, it helps to clearly state:
- which document contains the terms (e.g. supply agreement, online terms, or standard terms)
- how the buyer accepts those terms (signature, ticking a box, issuing a PO, etc.)
- what happens if there’s an inconsistency between documents
When that’s unclear, the Sale of Goods Act can become more relevant, because the Act supplies default rules where the contract doesn’t.
The Key “Implied Terms” Under The Sale Of Goods Act (NSW)
The Sale of Goods Act implies certain terms into sale contracts. “Implied” means they can apply even if you didn’t write them into your agreement.
These implied terms are a major reason why a “simple sale” can become legally complex, especially if the goods are faulty, not as described, or not fit for purpose.
Implied Term: The Seller Has Good Title
Generally, a seller is expected to have the right to sell the goods (and that the buyer will get legal ownership).
This becomes especially important if you’re selling goods sourced from third parties, selling consignment stock, or selling second-hand goods where ownership history could be unclear.
Implied Term: Goods Must Match Their Description
If goods are sold “by description” (which is common in ecommerce, catalogues, and wholesale ordering), the goods must correspond with that description.
This includes things like:
- model number or SKU
- size, material, or grade
- packaging count (e.g. cartons of 24)
- composition (e.g. “100% cotton”)
If your marketing or product listing overstates features, you may also be exposed under broader consumer law principles like misleading or deceptive conduct. The elements of misleading or deceptive conduct are worth understanding if you advertise goods or provide specs to buyers.
Implied Term: Satisfactory Quality (And The ACL Overlap)
Under the Sale of Goods Act (and also under the ACL in many cases), quality is a core issue.
In practice, consumer sales are usually assessed under the ACL’s consumer guarantees. The ACL guarantee that goods are of acceptable quality is commonly discussed through section 54.
Even if your sale is B2B and the Sale of Goods Act is doing more of the work, the underlying question is often similar: were the goods reasonably fit for normal use, free from defects (given their nature and price), and consistent with what was represented?
Implied Term: Fitness For Purpose (When The Buyer Relies On You)
If the buyer makes known a particular purpose (expressly or by implication), and they rely on your skill or judgment, there can be an implied term that the goods will be reasonably fit for that purpose.
For example:
- A restaurant asks for a refrigerator suitable for commercial kitchen use.
- A trades business asks for a product rated for outdoor installation.
- A manufacturer asks for materials of a certain specification for production.
This is one reason careful sales processes matter. If your staff are recommending products, your business may be taken to have made representations about suitability.
Sale By Sample
If a sale is “by sample,” the bulk goods should match the sample in quality. This often comes up where a buyer approved a sample unit, then receives a larger batch that differs (colour variation, material substitution, workmanship issues, and so on).
Having a clear written record of what the sample represents (and any tolerance levels) can be critical.
Delivery, Risk, Ownership, And Rejection: The “When Things Go Wrong” Rules
When disputes happen, they often come down to timing and responsibility:
- When did ownership pass?
- When did risk pass?
- Was delivery on time and in the right way?
- Did the buyer accept the goods (or can they reject them)?
Delivery Obligations
If the contract sets delivery terms (date, location, method, Incoterms-style arrangements, etc.), those terms usually control.
If it doesn’t, the Sale of Goods Act provides default rules, including expectations around delivery within a reasonable time.
For sellers, this is a good reason to be specific about:
- estimated vs guaranteed delivery timeframes
- partial deliveries
- what happens if the buyer can’t receive delivery
- inspection periods on delivery
When Does “Risk” Pass?
Risk is about who bears the loss if goods are damaged, destroyed, or go missing (for example, during shipping or while stored awaiting pickup).
Depending on the circumstances and contract terms, risk might pass at different points, such as:
- when the goods are delivered to the buyer
- when the buyer collects the goods
- when the goods are handed to a carrier (if agreed)
- when the buyer delays acceptance or collection
Because this can be fact-sensitive, it’s often worth spelling it out clearly in your terms and aligning your logistics process with what the contract says.
When Does Ownership (Title) Pass?
Ownership (title) is different from risk. For example, your contract might say ownership only passes once the buyer has fully paid, even if the goods have been delivered.
This kind of structure is sometimes supported through retention of title clauses, but they need careful drafting and practical enforcement to be effective.
Acceptance And The Right To Reject
A buyer may have a right to reject goods in some circumstances (for example, where goods don’t match description or are defective), particularly if they act promptly and haven’t “accepted” the goods.
Acceptance can happen where a buyer:
- tells the seller they accept the goods
- does something inconsistent with the seller’s ownership (like reselling or using them extensively)
- keeps the goods for too long without rejecting them (depending on the context)
For sellers, having clear inspection and claims windows in your terms (and training your team to follow them) can help reduce uncertainty and disputes.
How The Sale Of Goods Act Interacts With The Australian Consumer Law (ACL)
If you sell goods in NSW, you almost never deal with the Sale of Goods Act in isolation. The ACL can apply at the same time, and in many consumer-facing businesses the ACL will be the main legal framework.
The ACL Consumer Guarantees Can Override “No Refund” Policies
If the ACL applies, you can’t contract out of consumer guarantees. That means a “no refunds” sign will not protect you where the law requires a remedy for a major failure.
It’s also important to be careful with common myths, like “the warranty is only 12 months.” In reality, consumer guarantee periods depend on what’s reasonable for the goods. The idea of a fixed two-year rule is also often misunderstood, which is why the warranty 2 years discussion comes up so often.
Business Buyers Can Still Be “Consumers”
A buyer doesn’t stop being a “consumer” just because they have an ABN or a company name on the invoice.
Whether the ACL applies depends on factors like the type of goods, the purchase amount, and how the goods are ordinarily used. If you sell items that are commonly bought for personal or household use (even if a business buys them), the ACL may still apply.
Why This Matters For Your Returns, Repairs, And Replacement Process
From an operational perspective, your team should be able to triage issues quickly:
- Is the buyer likely covered by ACL consumer guarantees?
- Is this a “change of mind” request or a defect/non-compliance issue?
- Is it a major failure or minor failure (and what remedy is appropriate)?
- What evidence do you need (proof of purchase, photos, inspection)?
The better your internal process is, the less likely you are to accidentally refuse a valid claim-or accept liability where you don’t need to.
How To Protect Your Business: Contract Terms, Liability Settings, And Common Pitfalls
One of the best ways to reduce risk under the Sale of Goods Act (and the ACL where applicable) is to use clear, consistent contract terms that match how your business actually operates.
Key Terms To Consider Including
- Product specifications (including tolerance levels where relevant)
- Delivery terms (timeframes, method, what happens if delivery fails)
- Inspection and claims windows
- Returns process (what is required, who pays return shipping, restocking fees if lawful)
- Warranty language (careful not to misstate ACL rights)
- Risk and title provisions
- Payment terms (due dates, interest, suspension rights)
Limitation Of Liability Clauses (Used Carefully)
Many B2B sellers use a limitation of liability clause to cap exposure (for example, limiting liability to replacement, repair, or refund, or capping at the value of the goods supplied).
These clauses can be very useful, but they need to be drafted carefully-especially where consumer guarantees may apply or where unfair contract term rules could be relevant.
If you want to understand how these clauses typically work in Australian contracts, limitation of liability clauses is a good topic to get clear on before you roll out standard terms.
Common Pitfalls We See In NSW Goods Businesses
- Unclear “battle of the forms”: the buyer’s PO and the seller’s invoice both claim to be “the terms,” and nobody resolves the inconsistency upfront.
- Overpromising in product descriptions: sales copy, spec sheets, or salesperson statements create expectations that the goods don’t meet.
- No defined inspection period: issues are raised weeks later, after the goods have been used, installed, or resold.
- Misaligned logistics and contract wording: the contract says risk passes at one point, but operationally the business behaves as if it passes at another.
- Informal variations: someone agrees “we’ll swap it out for free” on the phone, without checking whether the goods are actually defective or what the contract says.
Most of these aren’t “bad faith” problems. They’re process and documentation problems-and they’re fixable with the right legal setup.
Key Takeaways
- The Sale of Goods Act 1923 (NSW) sets default rules for goods sale contracts in NSW, especially relevant in B2B transactions and where your contract is silent on key issues.
- The Act implies important terms about title, description, quality, and fitness for purpose, which can create liability even if you didn’t expressly promise those things in writing.
- Disputes commonly turn on delivery, risk, ownership (title), and acceptance-so it’s worth making these points crystal clear in your terms and processes.
- The Australian Consumer Law often applies alongside (or instead of) the Sale of Goods Act, including consumer guarantees that can’t be signed away with a “no refunds” policy.
- Clear contracts, consistent documentation, and carefully drafted clauses (including liability settings) can significantly reduce disputes and protect your cash flow.
If you’d like help reviewing or drafting terms for selling goods in NSW (including supply terms, online terms, warranty wording, and liability clauses), you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
