How to Draft a Sales Contract

Knowing how to draft a sales contract is an essential skill that all business owners should possess. The point of being in business is to make money, and that money is generally made through sales. A contract will help bind that sale so that all obligations are met by all parties involved.

What Is a Sales Contract?

A sales contract is among the most important documents any business owner can create. It is a legally binding agreement that is made between you and another organization or individual. You should develop a sales contract so that it will meet the needs of your business and ensure that your customer knows his or her obligations.

The easiest way you can make a sales contract is by deciding what your needs are and writing them down on paper.

Sales contracts are formal agreements between a seller and buyer when goods or services for money or the exchange of money. It will list all the specific terms and conditions, including the price and how the delivery will be handled. It is important to have a sales document in case there is litigation, but it also allows all parties to review the terms of the sale if necessary.

A sales contract will vary based on what you are selling and the responsibilities of everyone involved. This contract is a binding document. Although smaller sales do not require a sales contract, bigger sales should have one. A car sale, for instance, should require a sales contract.

If your sale is simple, you can write your own contract. However, if your agreement is very complex, like selling a business, you should work with your attorney.

What Are Oral Contracts?

A handshake deal can be considered an oral contract. This agreement can be enforced only in specific circumstances. An oral contract is hard to enforce because there is a lack of a record of the transaction, the consideration, and the acceptance.

Also, the United States requires that a contract for selling goods of over $500 be in writing in order to be enforced under Article 2 of the Uniform Commercial Code. This is not a federal law but a collection of statutes that has been adopted in all 50 states.

How to Make a Sales Contract

The following are the steps needed to make a sales contract:

  1. Place the words “sales contract” near the top of your page using bold letters. This will accurately describe the document and demonstrate that it is a legally binding contract.
  2. In the first paragraph, outline the things of all parties involved. Indicate that you are the seller of the service or product and that the other party will be the buyer. Include the dates of the sale of this section, so that it is understood when the contract was drafted. Also, include your address, as well as buyers addressed in this contract.
  3. Accurately describe your product or service that will be provided to the buyer in the next section. List the dates with which the product or service will be given to the buyer.
  4. List all terms of payment from the buyer in the next section. Note the entire cost of your product or service and whether the payment will be made all at once or in installments. Highlight each date that a payment should be made and the types of payment that you accept.
  5. List any penalties in place if the goods and services are not paid according to the contract in the next section.
  6. List all late fees, when they are applied, and when you expect those fees to be paid. Also, list any qualifications, if any, for the buyer to be allowed to reject the goods or services. This can include dissatisfaction of the buyer. Be sure to include a date range in which the buyer must claim that he or she is not satisfied to reject the product or service.
  7. Be sure to list the date when the agreement is signed near the bottom of the contract. Have all parties sign the agreement.

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