Basic Sales Transaction Agreement
A basic sales transaction agreement is beneficial in laying out the terms and conditions when buying or selling goods and services with another company.3 min read
A basic sales transaction agreement is beneficial in laying out the terms and conditions when buying or selling goods and services with another company. The agreement helps avoid misunderstandings and serves as a legal document in the event you end up in court. Any time a transaction is going to take place, it's good practice to create clear terms to ensure each party involved is aware of the details of the pending transaction.
Example of a Basic Sales Transaction Agreement
For example, a transaction agreement will define very specifically how delivery will be made. Each specific term used throughout the agreement should be clearly defined to avoid possible misunderstandings. Both parties will accept the document by adding their signature, which indicates both acceptance and agreement to comply with the terms of the transaction.
Are These Agreements Detailed?
Many transaction agreements are very detailed and include serial numbers and model and part numbers to ensure complete understanding of the transaction. When a transaction agreement is entered for the delivery of services to be performed, it is critical to give precise descriptions of the services and then an exact dollar amount to be paid for receiving such services. In addition, the location and date in which the service is to be completed and paid for should be included.
As a cushion of protection, a service provider may consider adding the details of an inspection to be completed after the service(s) have been provided to ensure service satisfaction. The service provider may note that once the transaction is complete, the service is considered satisfactory and the agreement is dissolved.
Do Transaction Agreements Include Payment Terms?
The payment terms should be clearly defined. For example, the agreement should state if the payment(s) are to be made in installments or at the end of the transaction. If payments are to be made in installments, be sure to indicate if the payments are monthly, yearly, quarterly, etc. Also, note if there is a late fee or a grace period for late payments.
Make sure the agreement always outlines guarantees, confidentiality, liability limits, and the process of amending the agreement. A high-quality transaction agreement will define the warranty or guarantee information, and it will also indicate who the responsible party will be in the event the goods are lost or stolen.
The Importance of a Transaction Agreement
Unfortunately, not all sales transactions go smoothly and many times this is because of miscommunication or failed expectations of either party. A transaction agreement should lay out all expectations clearly for both the buyer and seller.
Prospective buyers will often propose a sales agreement be entered as a promise from the seller to sell the goods or service as agreed upon. The agreement is considered a covenant and lists the obligations whereby the seller will act or refrain from acting in certain ways for a specified period of time.
The request for a covenant is typically done to ensure that the seller will not entertain other offers for a set amount time, unless and until the agreed-upon transaction fails to close, or for other reasons as defined and set forth in the transaction agreement.
A transaction agreement will generally indicate that the seller will continue to conduct its business as usual and will make reasonable efforts to preserve and maintain it business assets. In addition, the seller will maintain confidentiality and take all steps necessary to retain the services of its current employees.
The agreement serves as a legal contract and obligates the buyer to buy and the seller to sell. A good practice is to include a clause stating the transaction agreement is the only legal document covering the sale and that both parties must agree to and approve any changes or additions.
Basic Overview of Creating a Basic Sales Transaction Agreement
Here is a quick breakdown of a basic transaction agreement:
- A detailed description of goods or services
- Payment details
- Delivery of the goods or services
- The responsibility of loss or stolen items
- Warranty and guarantees
- Inspection details
- How changes are to be made and handled
- Indicate which state laws will govern the agreement
- Additional clauses
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