Sales Contract vs Sales Confirmation: Why Only One Protects You in a Dispute

You receive a Sales Confirmation from your supplier. You send your Purchase Order. Both sides proceed with the shipment. Six months later, a quality dispute arises. You want to resolve it in your home jurisdiction. They point to their confirmation document that says otherwise.

This guide explains the legal difference between a Sales Contract and a Sales Confirmation, why exchanging documents without signatures creates risk, and how to protect your position before goods ship.

What is the difference between a Sales Contract and a Sales Confirmation?

A Sales Contract is a legally binding agreement signed by both buyer and seller that defines the complete terms of a transaction. A Sales Confirmation is a one-sided document acknowledging receipt of an order or confirming transaction details.

The critical distinction is mutual agreement. According to contract law principles under both the Uniform Commercial Code (UCC) and the United Nations Convention on Contracts for the International Sale of Goods (CISG), a contract requires offer, acceptance, and mutual assent to terms. A confirmation document, by itself, does not establish that both parties agreed to the same terms.

• Sales Contract: Signed by both parties, specifies governing law, jurisdiction, warranties, liability limits, and dispute resolution

• Sales Confirmation: Issued by one party, acknowledges order details, often includes that party's standard terms and conditions

• Purchase Order: Issued by buyer, specifies what they want to purchase, often includes buyer's standard terms

When a buyer sends a PO with their terms and a seller responds with a confirmation containing different terms, neither document alone creates a clear, enforceable agreement on the disputed provisions.

What is the "battle of the forms" and why does it matter?

The "battle of the forms" occurs when buyers and sellers exchange documents with conflicting terms and proceed with the transaction without resolving those conflicts. This is one of the most common sources of uncertainty in commercial transactions.

According to UCC § 2-207, when parties exchange forms with different terms, a contract can still be formed. However, the conflicting terms are "knocked out" and replaced with UCC default provisions. This means neither party gets their preferred terms on the disputed issues.

Under CISG Article 19, the approach differs. A reply that contains material alterations to an offer is generally treated as a counter-offer rather than an acceptance. This can lead to different outcomes than under UCC rules, adding another layer of unpredictability for international transactions.

The key point: when UCC and CISG take different approaches, the outcome of a dispute may depend on which law applies—something that may itself be unclear if the parties never agreed on governing law.

What happens when documents conflict in real disputes?

In the 2014 case Allied Dynamics Corp. v. Kennametal, Inc. (E.D.N.Y.), a U.S. buyer disputed a forum selection clause that appeared in the seller's order confirmation. The clause would have required litigation in Milan, Italy, rather than in the United States.

The court had to examine whether CISG rules applied and whether the forum selection clause became part of the contract through the document exchange. This case illustrates how a routine confirmation document can lead to unexpected legal consequences when disputes arise.

According to ICC's 2024 Dispute Resolution Statistics, the International Chamber of Commerce handled cases totaling a record $354 billion in disputed amounts. Of the contracts involved, 95% included choice-of-law clauses. The remaining 5% proceeded without specifying governing law upfront.

Which terms typically conflict between documents?

Certain contract provisions consistently differ between buyer and seller forms. These are the terms most likely to cause problems when no signed contract exists:

• Governing law: Seller's form may specify their home country's law; buyer's form may specify theirs

• Dispute resolution: One party wants arbitration in Singapore; the other wants litigation in New York

• Warranty limitations: Sellers typically disclaim warranties; buyers want express guarantees

• Limitation of liability: Sellers cap damages at contract value; buyers want full consequential damages available

• Payment terms: Net 30 vs. Net 60, currency specification, late payment penalties

When these terms conflict and no signed contract resolves them, the applicable law determines the outcome. But if the parties also failed to agree on governing law, even that determination becomes contested.

Does CISG require a written contract for international sales?

No. Under CISG Article 11, international sales contracts do not require written form. Oral agreements, email exchanges, and conduct can all create binding contracts between parties in CISG member countries.

According to UNCITRAL, the body that developed the convention, CISG explicitly provides that contracts "need not be concluded in or evidenced by writing and are not subject to any other requirement as to form."

This differs from the UCC's statute of frauds, which generally requires written evidence for contracts involving goods over $500. The practical implication: in international transactions, you may be in a binding contract before you realize it, with terms determined by communications you considered informal.

How do you avoid battle of the forms risk?

The solution is straightforward: before shipping goods or making payment, get one document signed by both parties that supersedes all previous communications.

• Draft a master sales agreement for recurring transactions with the same buyer or supplier

• Use a single contract document for one-time transactions, rather than exchanging separate forms

• Include an integration clause stating the signed contract supersedes all prior documents and communications

• Specify governing law explicitly: choose UCC, CISG, or a specific country's law—and state whether CISG is included or excluded

• Define dispute resolution: arbitration institution, seat, and language, or court jurisdiction

The International Chamber of Commerce (ICC) provides model contract clauses for international sales. These include standard arbitration clauses that both parties can adopt by reference, reducing negotiation time while ensuring clarity.

What should a Sales Contract include that a Sales Confirmation does not?

A proper international Sales Contract should address terms that confirmations typically omit or handle inadequately:

• Complete party identification: Legal names, addresses, registration numbers

• Product specifications: Detailed descriptions, quality standards, inspection procedures

• Incoterms rule: FOB, CIF, DDP, etc., with named place

• Price and payment: Currency, payment method, timeline, documents required for payment

• Delivery schedule: Dates, partial shipment allowance, delay penalties

• Warranties and representations: Express warranties, disclaimer of implied warranties if applicable

• Limitation of liability: Caps on damages, exclusion of consequential damages

• Force majeure: Events excusing performance, notification requirements

• Governing law: Which country's law applies, whether CISG is included or excluded

• Dispute resolution: Arbitration vs. litigation, institution, seat, language

• Signature blocks: For authorized representatives of both parties

Quick reference: Sales Contract vs Sales Confirmation

• Sales Confirmation: One party issues, acknowledges order, includes issuer's terms, no mutual signature required

• Sales Contract: Both parties negotiate and sign, defines all material terms, creates clear mutual obligations

• Risk without signed contract: Battle of the forms, unpredictable governing law, disputed jurisdiction

• Protection with signed contract: Clear terms, predictable outcomes, enforceable dispute resolution clause

A Sales Confirmation starts a transaction. A Sales Contract protects it. Before your next international shipment, make sure you have the right document signed by both parties.