California Equipment Purchase and Sale Agreement

CALIFORNIA EQUIPMENT PURCHASE AND SALE AGREEMENT

Governed by the California Commercial Code and California Civil Code

NOTICE REGARDING CALIFORNIA LAW

This Agreement is governed exclusively by California law. Key California-specific provisions include:

• California Commercial Code Division 2 (California's enactment of UCC Article 2) governs this sale of goods
• California sales and use tax applies to this transaction; the California Department of Tax and Fee Administration (CDTFA) requires collection and remittance of applicable taxes on tangible personal property (Cal. Rev. & Tax. Code § 6051)
• California usury limits (Cal. Const. Art. XV, § 1) cap interest at the greater of 10% per annum or the Federal Reserve Bank of San Francisco discount rate plus 5% for non-exempt lenders
• California's 4-year statute of limitations for sales of goods applies (Cal. Com. Code § 2725)
• Prevailing party attorney fees are recoverable by contract under Cal. Civ. Code § 1717

AGREEMENT

This California Equipment Purchase and Sale Agreement ("Agreement") is entered into as of [__/__/____] ("Effective Date") by and between:

SELLER:
Name: [________________________________]
Entity Type: [________________________________]
State of Formation: [________________________________]
Principal Address: [________________________________]
CA Seller's Permit No. (CDTFA): [________________________________]

BUYER:
Name: [________________________________]
Entity Type: [________________________________]
State of Formation: [________________________________]
Principal Address: [________________________________]
CA Resale Certificate No. (if applicable): [________________________________]

(each a "Party" and together, the "Parties")

RECITALS

A. Seller owns or has the right to sell certain equipment described on Exhibit A (the "Equipment").

B. Buyer desires to purchase, and Seller desires to sell, the Equipment on the terms set forth in this Agreement.

C. The Parties intend this Agreement to constitute a contract for the sale of goods governed by Division 2 of the California Commercial Code (California's enactment of UCC Article 2).

D. The Equipment constitutes tangible personal property subject to California sales and use tax unless an exemption applies.

NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is acknowledged, the Parties agree as follows:

ARTICLE 1 — DEFINITIONS

"Applicable Law" means all California and federal statutes, regulations, and ordinances applicable to this transaction, including the California Commercial Code, California Civil Code, California Revenue and Taxation Code, and regulations of the CDTFA.

"Business Day" means any day California Superior Courts are open for business.

"CDTFA" means the California Department of Tax and Fee Administration, the state agency responsible for administration of California sales and use tax.

"Closing" means the date on which title to the Equipment transfers to Buyer and the Purchase Price is paid in full.

"Delivery Point" means [________________________________], California.

"Equipment" means the items described in Exhibit A, including all accessories, manuals, and associated documentation.

"Inspection Period" means [____] calendar days following delivery of the Equipment to the Delivery Point.

"Lien" means any mortgage, pledge, security interest, encumbrance, or charge of any kind, including any UCC financing statement filed with the California Secretary of State.

"Manufacturing Exemption" means the partial sales and use tax exemption under Cal. Rev. & Tax. Code § 6377.1 for qualifying manufacturing and research and development equipment (taxed at 3.3125% rather than the full state rate).

"Purchase Price" has the meaning set forth in Section 3.1.

"Specifications" means the technical and functional specifications for the Equipment set forth in Exhibit A.

"Warranty Period" means [________________________________] following Buyer's acceptance of the Equipment.

ARTICLE 2 — SALE AND PURCHASE

2.1 Agreement to Sell. Subject to the terms of this Agreement, Seller sells, assigns, transfers, and conveys to Buyer all right, title, and interest in and to the Equipment, free and clear of all Liens.

2.2 Bill of Sale. At Closing, Seller shall deliver to Buyer a duly executed bill of sale in the form attached as Exhibit B, warranting good and marketable title to the Equipment.

2.3 UCC Lien Search. Prior to Closing, Buyer may conduct a UCC lien search with the California Secretary of State and the applicable county recorder to confirm that no Liens encumber the Equipment. Seller shall cooperate with any such search and shall provide UCC-3 termination statements for any existing financing statements.

ARTICLE 3 — PURCHASE PRICE AND PAYMENT

3.1 Purchase Price. Buyer shall pay Seller the total sum of $[________________________________] ("Purchase Price"), allocated as follows:

3.2 California Sales and Use Tax.

(a) Unless Buyer provides a valid California resale certificate (CDTFA Form BOE-230) or other applicable exemption certificate prior to Closing, Seller shall collect and remit California sales tax on the transaction at the combined state and local rate applicable at the Delivery Point.

(b) If the Equipment qualifies for the California manufacturing and research equipment partial exemption (Cal. Rev. & Tax. Code § 6377.1), Buyer shall provide Seller with a timely partial exemption certificate (CDTFA Form CDTFA-230).

(c) Current California statewide base sales tax rate: 7.25%. District taxes may apply depending on the Delivery Point location. Buyer is responsible for verifying the applicable combined rate through the CDTFA rate lookup tool.

3.3 Payment Schedule.

☐ Option A — Lump Sum. The full Purchase Price (plus applicable tax) is due at Closing.

☐ Option B — Installment. The Purchase Price shall be paid as follows:

• Deposit: $[________________________________] due within [____] Business Days after the Effective Date
• Progress payment: $[________________________________] due on [__/__/____]
• Final payment: $[________________________________] due at Closing on [__/__/____]

3.4 Method of Payment. All payments shall be made by wire transfer to Seller's designated account or by cashier's check drawn on a California-chartered bank.

3.5 Late Payment Interest. Any amount not paid when due accrues interest at the rate of [____]% per annum, provided that in no event shall the interest rate exceed the maximum rate permitted under Article XV, Section 1 of the California Constitution. For non-exempt lenders, this maximum is the greater of: (a) 10% per annum, or (b) the Federal Reserve Bank of San Francisco discount rate plus 5% at the time the obligation was incurred.

3.6 No Usury. Notwithstanding any provision of this Agreement, no interest or charge shall be collected, reserved, or taken that would cause the amounts payable to exceed the maximum permitted under California usury law (Cal. Const. Art. XV; Cal. Civ. Code § 1916-1 et seq.). Any excess interest collected shall be applied to reduce the Purchase Price balance or refunded to Buyer.

ARTICLE 4 — DELIVERY, RISK OF LOSS, AND TITLE

4.1 Delivery. Seller shall deliver the Equipment to the Delivery Point on or before [__/__/____]. Delivery terms are:

☐ FOB Delivery Point (risk passes upon tender at Delivery Point)
☐ FOB Seller's Location (risk passes when Equipment is placed with carrier)
☐ FCA (Incoterms 2020) [________________________________]

4.2 Risk of Loss Under California Law. Risk of loss passes in accordance with California Commercial Code §§ 2509 and 2510. If the Equipment is tendered and Buyer wrongfully rejects or revokes acceptance, risk of loss rests on Buyer to the extent of any deficiency in Seller's insurance coverage (Cal. Com. Code § 2510(c)).

4.3 Passage of Title. Title to the Equipment passes to Buyer upon the later of: (a) delivery to the Delivery Point, and (b) receipt by Seller of the Purchase Price in full. Seller retains a purchase-money security interest in the Equipment until full payment (Cal. Com. Code § 2401).

4.4 Certificate of Origin / Title. For Equipment requiring registration with the California Department of Motor Vehicles (e.g., certain mobile equipment, vehicles), Seller shall deliver a clean California certificate of title or manufacturer's certificate of origin at Closing.

ARTICLE 5 — INSPECTION AND ACCEPTANCE

5.1 Right to Inspect. Under California Commercial Code § 2513, Buyer has the right to inspect the Equipment before payment or acceptance. Buyer shall conduct inspection during the Inspection Period.

5.2 Acceptance. The Equipment is deemed accepted upon the earlier of:
(a) Buyer's written notice of acceptance; or
(b) Expiration of the Inspection Period without Buyer issuing a Rejection Notice.

5.3 Rejection for Nonconformity. Under California Commercial Code § 2601, if the Equipment fails to conform to the Specifications in any respect, Buyer may:
(a) Reject the whole;
(b) Accept the whole; or
(c) Accept any commercial units and reject the rest.

5.4 Rejection Notice. If Buyer rejects, Buyer shall deliver written notice specifying the nonconformities ("Rejection Notice") within the Inspection Period. Buyer shall hold rejected Equipment with reasonable care for a period sufficient for Seller to arrange return (Cal. Com. Code § 2602(b)).

5.5 Seller's Cure Right. Under California Commercial Code § 2508, if time for performance has not yet expired, Seller may seasonably notify Buyer of intent to cure and deliver conforming Equipment within the contract time. If Buyer rejects a tender that Seller had reasonable grounds to believe would be acceptable, Seller has a further reasonable time to substitute a conforming tender.

5.6 Revocation of Acceptance. Buyer may revoke acceptance under California Commercial Code § 2608 if a nonconformity substantially impairs the value of the Equipment and:
(a) Buyer accepted on the reasonable assumption that the nonconformity would be cured, and it has not been seasonably cured; or
(b) Buyer accepted without discovery of the nonconformity, and acceptance was reasonably induced by the difficulty of discovery or by Seller's assurances.

ARTICLE 6 — REPRESENTATIONS AND WARRANTIES

6.1 Mutual Representations. Each Party represents that:
(a) It is duly organized and in good standing under California law (or its state of formation) and is qualified to do business in California;
(b) It has full authority to enter into and perform this Agreement; and
(c) This Agreement is enforceable against it in accordance with its terms.

6.2 Seller's Warranties.

(a) Title Warranty (Cal. Com. Code § 2312). Seller warrants good and marketable title to the Equipment, free of all Liens and encumbrances, and that the transfer is rightful.

(b) Warranty Against Infringement (Cal. Com. Code § 2312(c)). Seller warrants that the Equipment, as delivered, does not infringe any patent, trademark, copyright, or trade secret of any third party.

(c) Express Warranty of Conformity. The Equipment shall materially conform to the Specifications set forth in Exhibit A and shall be free from defects in material and workmanship for the duration of the Warranty Period.

(d) Implied Warranty of Merchantability (Cal. Com. Code § 2314). Seller warrants that the Equipment is merchantable, meaning it is fit for the ordinary purposes for which such equipment is used, adequately packaged and labeled, and conforms to any promises or affirmations on the container or label.

(e) Implied Warranty of Fitness for Particular Purpose (Cal. Com. Code § 2315). If Seller knows or has reason to know Buyer's particular purpose for the Equipment and Buyer is relying on Seller's skill or judgment to furnish suitable Equipment, Seller warrants that the Equipment is fit for that particular purpose.

(f) Regulatory Compliance. The Equipment complies with all applicable California regulatory requirements, including Cal/OSHA standards (Cal. Lab. Code § 6300 et seq.) and applicable California Air Resources Board (CARB) regulations.

6.3 Warranty Disclaimer (If Applicable).

☐ Check if the Parties agree to disclaim implied warranties. If checked, the following applies:

EXCEPT AS EXPRESSLY SET FORTH IN SECTION 6.2(a)-(c), SELLER DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, IN ACCORDANCE WITH CALIFORNIA COMMERCIAL CODE § 2316. THIS DISCLAIMER IS CONSPICUOUS AS REQUIRED BY CAL. COM. CODE § 2316(b).

6.4 Warranty Period and Remedies. During the Warranty Period, Seller shall, at its option and expense: (a) repair the defective Equipment; (b) replace the defective Equipment with conforming Equipment; or (c) refund the portion of the Purchase Price attributable to the defective Equipment.

6.5 Statute of Limitations. Under California Commercial Code § 2725, an action for breach of any contract for the sale of goods must be commenced within four (4) years after the cause of action accrues. The Parties:

☐ Agree to the statutory 4-year period
☐ Agree to reduce the period to [____] year(s) (minimum 1 year per Cal. Com. Code § 2725(a))

ARTICLE 7 — CALIFORNIA-SPECIFIC COVENANTS

7.1 Compliance with California UCL. Each Party covenants that its performance under this Agreement shall not constitute an "unlawful, unfair, or fraudulent business act or practice" within the meaning of California Business and Professions Code § 17200 et seq. (the "Unfair Competition Law").

7.2 No Restraint of Trade. Consistent with California Business and Professions Code § 16600, this Agreement does not contain, and shall not be construed to impose, any non-compete restriction on either Party. Neither Party is restricted from engaging in any lawful profession, trade, or business after termination or expiration of this Agreement.

7.3 Consumer Legal Remedies Act (CLRA) Compliance. To the extent Buyer is a "consumer" purchasing Equipment primarily for personal, family, or household purposes, Seller acknowledges that the CLRA (Cal. Civ. Code § 1750 et seq.) may apply and that any waiver of CLRA rights is void and unenforceable (Cal. Civ. Code § 1751).

7.4 CDTFA Compliance. Seller represents that it holds a valid California seller's permit and will comply with all CDTFA reporting and remittance requirements for this transaction, including timely filing of returns and payment of sales tax collected.

7.5 Environmental Compliance. Seller represents that the Equipment complies with all applicable California environmental regulations, including the California Environmental Quality Act (CEQA), CARB emissions standards, and Proposition 65 (Safe Drinking Water and Toxic Enforcement Act of 1986) labeling requirements, where applicable.

7.6 Further Assurances. Each Party shall execute additional documents reasonably necessary to effectuate the purposes of this Agreement.

ARTICLE 8 — CONFIDENTIALITY

8.1 Obligations. Each Party shall maintain the confidentiality of proprietary information disclosed by the other Party in connection with this Agreement for a period of [____] years following the Effective Date.

8.2 California Trade Secrets. To the extent any Confidential Information constitutes a "trade secret" under the California Uniform Trade Secrets Act (Cal. Civ. Code § 3426 et seq.), protections apply indefinitely.

8.3 Permitted Disclosures. Confidentiality obligations do not restrict disclosures required by California law, court order, or subpoena, provided the disclosing Party gives prompt written notice to the other Party.

ARTICLE 9 — DEFAULT AND REMEDIES

9.1 Events of Default.
(a) Buyer Default: Failure to pay any amount when due; failure to accept conforming delivery; insolvency or bankruptcy.
(b) Seller Default: Failure to deliver the Equipment by the delivery deadline; delivery of materially nonconforming Equipment without timely cure; insolvency or bankruptcy.

9.2 Notice and Cure. The non-defaulting Party shall provide written notice specifying the default. The defaulting Party shall have [____] Business Days to cure (payment defaults) or [____] Business Days to cure (non-payment defaults).

9.3 Buyer's Remedies Under California Law. Upon Seller's uncured default, Buyer may exercise any remedy available under California Commercial Code Division 2, including:
(a) Cover (Cal. Com. Code § 2712) — purchase substitute equipment and recover the difference;
(b) Damages for non-delivery (Cal. Com. Code § 2713) — market price minus contract price;
(c) Specific performance (Cal. Com. Code § 2716) — where Equipment is unique or in other proper circumstances;
(d) Rescission (Cal. Civ. Code § 1689) — cancel the Agreement and recover amounts paid.

9.4 Seller's Remedies Under California Law. Upon Buyer's uncured default, Seller may:
(a) Withhold delivery (Cal. Com. Code § 2703);
(b) Resell the Equipment (Cal. Com. Code § 2706) and recover the difference;
(c) Recover the price (Cal. Com. Code § 2709) if resale is impracticable;
(d) Demand adequate assurance of performance (Cal. Com. Code § 2609).

9.5 Liquidated Damages. [If applicable:] The Parties agree that $[________________________________] constitutes a reasonable estimate of damages for [________________________________]. This liquidated damages provision is valid under California Civil Code § 1671(b), which presumes the validity of liquidated damages clauses in commercial contracts. The Party challenging this provision bears the burden of proving it was unreasonable at the time the Agreement was made.

9.6 Prevailing Party Attorney Fees. Pursuant to California Civil Code § 1717, in any action arising out of this Agreement, the prevailing party shall be entitled to recover its reasonable attorney fees, court costs, and litigation expenses. Under § 1717, where a contract provides for attorney fees to one party, the prevailing party — whether or not the party specified in the contract — is entitled to fees.

ARTICLE 10 — INDEMNIFICATION AND RISK ALLOCATION

10.1 Seller's Indemnification. Seller shall indemnify, defend, and hold harmless Buyer and its officers, directors, employees, and agents from Losses arising from:
(a) Breach of Seller's warranties;
(b) Title defects or Liens not disclosed;
(c) Third-party intellectual property infringement claims related to the Equipment;
(d) Personal injury or property damage caused by defective Equipment (product liability).

10.2 Limitation of Liability. EXCEPT FOR: (a) SELLER'S INDEMNIFICATION OBLIGATIONS; (b) EITHER PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT; OR (c) LIABILITY THAT CANNOT BE LIMITED UNDER CALIFORNIA LAW, NEITHER PARTY'S AGGREGATE LIABILITY SHALL EXCEED $[________________________________].

10.3 Consequential Damages Waiver. EXCEPT FOR SELLER'S INDEMNIFICATION OBLIGATIONS UNDER SECTION 10.1, NEITHER PARTY SHALL BE LIABLE FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES, INCLUDING LOST PROFITS. NOTE: Under California law, consequential damages waivers in commercial contracts are generally enforceable, but a court may decline to enforce a waiver that is unconscionable (Cal. Com. Code § 2719(c)).

10.4 Insurance. During the period from the Effective Date through expiration of the Warranty Period, Seller shall maintain commercial general liability insurance with limits of at least $[________________________________] per occurrence, naming Buyer as additional insured, with a California-admitted carrier.

10.5 Force Majeure. Neither Party is liable for delay caused by events beyond reasonable control, including natural disasters, government orders, California state emergency declarations, labor disputes, or acts of God. The affected Party shall provide prompt notice and use diligent efforts to resume performance.

ARTICLE 11 — DISPUTE RESOLUTION

11.1 Governing Law. This Agreement is governed by the laws of the State of California, including the California Commercial Code (Division 2), the California Civil Code, and the California Code of Civil Procedure, without regard to conflict-of-laws principles.

11.2 Exclusive Forum — California Superior Court. Subject to Section 11.3, the Parties submit to the exclusive jurisdiction of the California Superior Court for the County of [________________________________] and the United States District Court for the [________________________________] District of California. Each Party waives objections to venue and forum non conveniens.

11.3 Arbitration (Optional).

☐ Arbitration Elected. Disputes shall be resolved by binding arbitration administered by [________________________________] in [________________________________], California, under its commercial rules. The arbitrator shall apply California substantive law. Judgment on the award may be entered in any California Superior Court. Discovery shall be conducted in accordance with California Code of Civil Procedure § 1283.05.

☐ Arbitration Not Elected. Section 11.2 governs all disputes.

11.4 Jury Trial Waiver. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY CALIFORNIA LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING OUT OF THIS AGREEMENT. Each Party certifies that no representative of the other Party has represented that the other Party would not seek to enforce this waiver. This waiver is a material inducement for the Parties to enter into this Agreement.

11.5 Statutes of Limitation.

• Written contract claims: 4 years (Cal. Code Civ. Proc. § 337)
• Sale of goods claims: 4 years (Cal. Com. Code § 2725)
• Fraud claims: 3 years (Cal. Code Civ. Proc. § 338(d))

ARTICLE 12 — GENERAL PROVISIONS

12.1 California Statute of Frauds. This Agreement satisfies the requirements of the California Statute of Frauds (Cal. Civ. Code § 1624; Cal. Com. Code § 2201) as a written contract for the sale of goods exceeding $500 in value.

12.2 Entire Agreement. This Agreement (including all Exhibits) constitutes the entire agreement of the Parties and supersedes all prior oral or written understandings. Under California law, parol evidence of prior or contemporaneous oral agreements is inadmissible to contradict the terms of an integrated written agreement (Cal. Code Civ. Proc. § 1856).

12.3 Amendment and Waiver. Amendments require a writing signed by both Parties. Waivers are effective only if in writing and limited to the specific instance. Under California Commercial Code § 2209, a modification of a contract for the sale of goods needs no consideration to be binding.

12.4 Assignment. Neither Party may assign this Agreement without the other's prior written consent, except to a successor by merger or acquisition of substantially all assets. Any purported assignment in violation of this Section is void.

12.5 Severability. If any provision is held invalid by a California court, the remaining provisions remain in full force. The invalid provision shall be reformed to the minimum extent necessary.

12.6 Notices. All notices must be in writing and delivered by: (a) personal delivery; (b) certified U.S. mail, return receipt requested; or (c) nationally recognized overnight courier, to the addresses in the preamble or as updated by notice. Notices are effective upon receipt or refusal.

12.7 Electronic Signatures. This Agreement may be executed in counterparts. Electronic signatures are valid under the California Uniform Electronic Transactions Act (Cal. Civ. Code § 1633.1 et seq.) and the federal ESIGN Act.

12.8 Interpretation. Headings are for convenience only. "Including" means "including without limitation." Ambiguities shall not be construed against the drafter (Cal. Civ. Code § 1654 is expressly waived to the extent permitted by law).

EXECUTION

IN WITNESS WHEREOF, the Parties have executed this California Equipment Purchase and Sale Agreement as of the Effective Date.

SELLER:

Signature: [________________________________]
Printed Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

BUYER:

Signature: [________________________________]
Printed Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

EXHIBIT A — EQUIPMENT DESCRIPTION AND SPECIFICATIONS

Technical Specifications: [________________________________]

Included Accessories/Manuals: [________________________________]

Current Location of Equipment: [________________________________], California [____]

EXHIBIT B — FORM OF BILL OF SALE

[To be attached — California-compliant bill of sale transferring title to Equipment]

EXHIBIT C — UCC FINANCING STATEMENT RELEASES

[Attach UCC-3 termination statements for any existing financing statements, if applicable]

Sources and References

• California Commercial Code, Division 2 (Sales): https://leginfo.legislature.ca.gov/faces/codesTOCSelected.xhtml?tocCode=COM
• California Civil Code (Contracts): https://leginfo.legislature.ca.gov/faces/codesTOCSelected.xhtml?tocCode=CIV
• California Code of Civil Procedure (Statute of Limitations): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CCP&sectionNum=337
• CDTFA Sales and Use Tax Information: https://cdtfa.ca.gov/taxes-and-fees/sutprograms.htm
• CDTFA Manufacturing Equipment Partial Exemption: https://cdtfa.ca.gov/industry/manufacturing-and-research-and-development-equipment-exemption/
• California Constitution Article XV (Usury): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CONS&sectionNum=SECTION+1.&article=XV
• California Unfair Competition Law (Bus. & Prof. Code § 17200): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=17200.&lawCode=BPC
• California Non-Compete Prohibition (Bus. & Prof. Code § 16600): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=BPC&sectionNum=16600.