33+ Sample Sales Agreements

What Is a Sales Agreement?

Imagine selling your car or your house; you need a sales agreement to protect your rights as a seller—the right to be paid at the time designated for payment and the right to be compensated for damages in case the other party violates his obligations. Entering into contracts ensure parties that their rights will be protected and obligations will be honored. A sales agreement is a type of contract or an agreement between a buyer and a seller. It contains the terms and conditions governing a buy-and-sell transaction. The contract should also have the purchase price and the specification of the goods and/or products the seller is purchasing.

Like most contracts, it also includes warranties and insurance clauses to protect the buyer’s rights further. It is worth noting that both the buyer and the seller’s rights are taken into account when drafting a sales agreement. Since before agreeing, both parties come up with mutually agreeable terms—also known as negotiation period. 

Importance of Executing a Sales Agreement 

When reaching an agreement, the signing of a written contract necessarily follows. But before participating in and signing a sales agreement, we need to know its importance. The following are a few reasons why a sales agreement is vital in sales transactions. 

Details the Transaction

This prevents future misunderstanding. It identifies the individuals taking part in the transaction, the goods or object subject of the transaction—including a description of the goods to be sold: quantity, weight, height, and color— and the consideration to be paid to by the buyer to the seller.

Reinforces the Obligations of the Parties to the Sale

On the part of the seller: to deliver the goods to the seller in a designated time and a designated place, to provide a warranty for a specific period, and to provide an insurance policy (if necessary). And the obligations of the buyer: to accept the goods from the seller and pay the purchase price within the designated time. 

Indicates the Rights and Liabilities of Parties

The seller has to be paid the amount stipulated in the sales agreement, to ask for the return of the goods for reason of non-payment, and to ask for damages for the buyer’s breach of contract. The buyer claims the right to have the goods delivered, the right to reject the goods if it does not conform to the specifications stated in the sales agreement, and the right to terminate the contract and ask for damages for the seller’s breach of contract.

When a breach happens, usually, the parties either pay for damages or have the contract terminated or both. 

State laws require some sale transactions on a large scale to be put in writing for tax purposes, as provided under the statute of frauds. Contracts for the sale of goods worth a certain amount to be enforceable and binding should be in writing or contained in a sales agreement. The amount under the statute of fraud varies from one state to another, depending on what provision of the UCC they enact as state law. 

Provisions in a Sales Agreement

A sales agreement is a contract. Just like any other contract, entering into one has legal consequences. When drafting contracts, we need to be cautious and take into consideration future liability. Hence, it is important to know what to include and what not to include.

Parties to the Contract: Properly identify the person taking part in the sales agreement—seller and the buyer. Include the complete names and addresses.Object of the Contract: The objects in a contract are goods or properties purchased by the buyer from the seller—a used car, a mobile home, antique furniture, company equipment, or seller’s artwork. A sales agreement should provide a detailed description of the goods or property to be sold: it’s quantity, color, height, weight, serial number, manufacturing date, and production number (if possible).Delivery Details: It is important to state the date the goods or property are to be delivered, and how delivery is to be made—for goods, delivery can be made through land, air, or sea transportation; concerning properties, it is typically delivered through registration of the deed of sale and a document signifying the transfer of ownership.Consideration: The purchase price is the total amount to be paid by the buyer to the seller for the goods or property sold. Consideration can either be money or property. When the consideration is property, the sale transaction can be classified as a barter exchange transaction. Another form of consideration is payment-in-kind—the buyer performs an act of service as payment for the goods or property sold.Payment Method: A sales agreement should specify the payment scheme; it can be a one-time payment basis or installment basis. Payment can be made in cash or credit—checks. Representation and Warranties: A representation is a statement by the seller of an existing fact regarding the goods or property he is selling which persuades the buyer to purchase the goods or property. A warranty is a promise made by the seller that the goods or property is up to standards, and if anything happens to the goods within a specified time, the seller undertakes to have it exchanged with a better one.Insurance Clause: In certain sale contracts, an insurance policy is usually inserted upon the option of the buyer. A third party—an insurance company—undertakes to provide compensation to the beneficiary named in the insurance policy for damage or loss of the goods or property sold subject to the terms and conditions of the policy.Applicable Law: This speaks of the law which shall govern the contract and the sale transaction, which is usually the place where the contract of sale was executed or entered into. Different states have different laws governing sale transactions. It is important to familiarize yourself with them.Signature: The parties to the sale agreement have to sign the agreement to bind them to it. Usually located at the end of the contract.

Examples of Transactions that Need a Sales Agreement

Sales agreements are essential in most businesses. It can be, in a way, classified as indispensable. Businesses have made it mandatory to place in writing their sales agreement as evidence of a transaction. Most of the time, when you purchase goods or property, you find yourself signing a sales agreement.

Purchasing of a Vehicle 

Stacks over stacks of papers are what usually fills a car salesman’s desk. In his line of work, he is expected to sell a car at least once a week. A seasoned car dealer is not new to sale transactions and has signed over a hundred sales agreement for the sale of vehicles. 

Purchasing of Real Estate

Entering in a sales agreement is not uncommon in real estate businesses. Before reaching an agreement, the buyer and the real estate agent or the seller have to go through the negotiation phase where a buyer makes an offer, and the real estate agent makes a counteroffer. In the negotiation phase, the offer and counteroffer are rejected over and over until an agreeable offer and/or counteroffer is reached by the parties. 

Purchasing of Goods

The simplest of sale is the sale of retail goods in stores. The sales agreement is usually in the receipt given by the store to the purchaser. A buyer isn’t usually aware that the receipt handed to them by a cashier of a store is a contract. We call these contracts of adhesion. So when buying from a store, we can say that we are unknowingly entering into a contract.

How to Make a Sales Agreement

Every day, if not at least once in a week, we find ourselves entering into a sales agreement. From buying our groceries to purchasing an automobile, a sales agreement is always involved. But before actually entering into a sales agreement, there are certain stages we find ourselves in. 

Let’s say you’re planning to sell your old house. Before you can sell it, you had to trouble yourself with finding a potential buyer, sometimes it takes weeks, or months, maybe even years—depending on what you’re selling. And when you do find one, you have to negotiate until you’ve come up with an agreement to sell.  In this part of the article, we’ll be talking about the stages of the sale transaction from finding a buyer to signing the sales agreement—basically how the sales agreement is made and completed. 

Step 1. Notice of Sale

Placing an advertising post that an item, goods, or property is for sale. Lure potential buyers by posting a notice that an item or property is up for grabs. You can do this online or offline. Give out flyers, place an ad in your local newspaper, inform people by word of mouth, or post on social media sites. Find potential buyers. 

Step 2. Inspection of the Goods or Property

Most buyers prefer to see in the flesh what they’re buying and having access to inspect it for faults or defects before actually purchasing it. When you do find a potential buyer, scheduled goods, or property assessment is needed. 

Step 3. Offer to Buy 

A potential buyer has signified his intent in buying the goods or property on sale. This can be made either through an offer letter or oral offer (on-site). 

Step 4. Negotiating the Terms and Conditions

Both seller and buyer must come up with mutually agreed terms and conditions—also known as the negotiation stage in a sale transaction. When purchasing, we often try and get the best price out of the salesman, we call this haggling. Once you’re satisfied with the price and other terms of the agreement, you’ll be able to put it in writing. 

Step 5. Drafting the Contract

The buyer and the seller have come up with mutually agreed terms and conditions for the purchase contract. All they have to do is put it in writing. 

Imagine making a huge sale. It feels like you’ve hit the jackpot. You’ve finally found a buyer for your old family home. He’s agreed to pay a generous amount, more than what you’ve anticipated. But, alas! He failed to make all of his payments. Unfortunately, you di to put your agreement in a written sales contract; hence, you cannot enforce your rights as a seller—the right to be paid. This could have been avoided if only you entered into a written sales agreement. A sales agreement can help you enforce your rights as a seller since it is a legally binding document with legal repercussions in the event of a breach of its terms. So, next time you find yourself entering into a sale transaction, be sure to prepare a sales agreement.