A sales contract is an agreement between a buyer and a seller of goods, services, or digital products. It states the terms and conditions under which the sale is agreed to. In this article, we will discuss the provisions of a sales contract and provide you with a sales contract sample and FAQs.
What is a Sales Contract
A sales contract is a legally binding agreement between a seller and a buyer. The contract outlines the terms of the sale, including the price, quantity, and delivery date. Sales contracts are used in both BtoB and BtoC transactions.
Sales contracts are also known as purchase agreements, sales agreements, or product supply agreements.
Sales contracts are important because they protect both the buyer and the seller. For the buyer, a sales contract ensures that they will receive the goods or services they have purchased. For the seller, a sales contract ensures that they will be paid for their goods or services. Sales contracts also help to avoid misunderstandings between buyers and sellers.
Sales contracts can either be written or verbal. However, it is always best to have a written sales contract so that there is a record of what was agreed upon. A written sales contract also allows for more complex provisions to be included, such as choice of law clauses and arbitration clauses.
The Main Contractual Provisions of a Sales Contract
There are many different provisions that can be included in a sales contract. Some standard provisions include:
- The names and contact information of the buyer and seller
- A description of the goods or services being sold
- The price of the goods or services being sold
- The number of goods or services being sold
- The delivery date of the goods or services being sold
- The payment terms of the sale
- Any warranties or guarantees that are being offered
- The governing law of the contract (which state’s laws will be used to interpret the contract if there is a dispute)
- The signatures of the buyer and seller
A sales contract can also include other provisions, such as:
- Non-compete clauses
- Confidentiality clauses
- Intellectual property clauses
- Termination clauses
It is important to consult with an attorney before signing a sales contract, especially if you do not understand all of the provisions in the contract. An attorney can help explain the meaning of the provisions and negotiate changes to the contract on your behalf.
Rights and Obligations of Buyer and Seller
Under a sales contract, the buyer has the right to purchase the property and the seller has the obligation to sell the property. The buyer typically pays for the property with a combination of cash and a loan.
The loan is usually secured by a mortgage or deed of trust on the property. This means that if the buyer defaults on the loan, the lender can foreclose on the property and sell it to repay the loan.
The seller typically has certain obligations under the sales contract, such as:
- Disclosing known defects in the property
- Obtaining any necessary permits
- Making repairs to comply with building codes
- Providing a clear title to the buyer
The seller’s rights and obligations also include:
- Obligation to send the correct goods that were agreed upon in the contract.
- Obligation to send the goods at the correct time
- Obligation to send the goods in appropriate condition
- Right to timely payment for goods supplied to a buyer
- Right to payment in the right amount
The seller also usually agrees to pay certain closing costs, such as:
- Property taxes
- Title insurance
- Recording fees
The buyer is usually bound by obligations under the sales contract, such as:
- Obtaining financing
- Paying the agreed-upon purchase price
- Complying with inspections
Some of the buyer’s rights and obligations also include:
- Obligation to pay for the goods when they are given to the buyer.
- Obligation to follow the conditions of the contract
- Right to receive the goods at the agreed-upon time.
- Right to any warranties that haven’t been disclaimed.
- The buyer is entitled to the goods that are listed in the sales agreement.
The buyer also usually agrees to pay certain closing costs, such as:
- Property taxes
- Title insurance
- Recording fees
The buyer and seller can negotiate who will pay these costs. In some cases, the seller may agree to pay all or part of the buyer’s closing costs. The following is a sample sales contract. This is just an example, so be sure to have your sales contract reviewed by a lawyer before signing it.
When To Use a Sales Agreement
A Sales Agreement is used to document the sale of goods from a seller to a buyer. This agreement can be used for the sale of goods like furniture, electronics, motor vehicles, and other property.
The agreement should list:
- The names and contact information of the buyer and seller.
- A description of the goods being sold.
- The purchase price of the goods.
It’s important to have a written record of the sale in order to protect both parties involved in the transaction. If there are any disputes that arise after the sale is complete, you will be able to refer back to this agreement to help resolve them.
If you’re selling or buying property, it’s also a good idea to have a lawyer look over the contract before you sign it. This will ensure that all of the terms are fair and that there is nothing in the agreement that could come back to bite you later on.
How to Create Your Own Sales Contract
Now that you know what should be included in a sales contract, you can start creating your own. If you’re not sure where to start, there are plenty of templates and samples available online.
Once you’ve found a template or sample that you like, all you need to do is fill in the blanks with the relevant information. Be sure to include all of the provisions we discussed earlier, such as the purchase price and delivery date.
If you’re selling property, you’ll also need to include some additional information about the property itself. This includes things like square footage, the number of bedrooms and bathrooms, and any special features or amenities that come with the property.
You should also include a clause that states that the contract is void if any of the information provided by the seller is found to be false.
Once you’ve finished filling out the contract, both you and the buyer will need to sign it. Once it’s been signed, the contract is legally binding.
Sales Contract Sample
Here’s a sample sales contract that you can use as a template when creating your own. Just remember to fill in the specific details for your situation:
Seller: ______________________________ Buyer: ______________________________ Property Address: ______________________________ Sales Price: $_____________________ Date of Sale: ____________________ Deposit Amount: $___________________ Date of Deposit: ___________________ Full Payment Due: $__________________ Date of Full Payment: _______________ Property Description (include square footage, number of bedrooms and bathrooms, etc.):_________________________________________________________ The above information is accurate to the best of the seller's knowledge. The contract is binding upon the seller and the buyer. This contract is not to be construed as an offer to sell, but rather an agreement to sell. The following items are included in the sale: ___________________________________________________________ All fixtures and appliances located on the property at the time of inspections are included in the "as is" condition. The seller is not responsible for repairing or replacing any damaged items. The following items are NOT included in the sale: ___________________________________________________________ This contract is subject to change or cancellation by either party with written notice. All other terms and conditions will remain in effect. By signing below, both parties agree to all terms and conditions of this contract. Seller's Signature: ___________________________________________________________ Buyer's Signature: ___________________________________________________________ Date: ___________________________________________________________
FAQs about sales contracts
Do I need a sales contract?
If you’re selling anything of value, it’s always a good idea to have a sales contract. This protects both you and the buyer in case something goes wrong.
What information should I include in a sales contract?
You should include all of the relevant details about the transaction, including a description of the item being sold, the price, and the terms of the sale.
What if I’m selling something online?
You can use a sales contract even if you’re selling something online. Just be sure to include all relevant information about the transaction, such as the buyer’s shipping address.
What if I’m selling something on consignment?
If you’re selling something on consignment, you’ll need to include that information in the contract. You’ll also need to specify how long the item will be on consignment, and what the commission split is between you and the seller.