What are the potential liabilities for a seller of goods?

Generally, with respect to the sale of goods, a seller may be exposed to contractual liability with the buyer arising from issues with performance, including but not limited to claims for breach of express or implied warranties, claims regarding nonconforming goods, and claims related to the time of delivery. Whether related to a warranty or not, the claim arises from and relates to the terms of contract. Claims against a seller by a buyer under a contract are called “first party claims.”

In addition to first party claims, a seller may be exposed to third party liability, particularly if the buyer sells the goods to another person or incorporates them into a product the buyer then sells to a third party. Third party claims could be brought by anyone reasonably likely to use the goods, including employees of the buyer, in certain circumstances, or customers of the buyer. Third parties may bring claims in either tort, i.e. for product liability, or in contract for breach of warranty. Third party claims typically involve personal injury or property damage.