Product Sales Agreement: Everything You Need to Know
A product sales agreement is a contract that states the terms of sale for any services or goods that are sold to a third party.3 min read
A product sales agreement is a contract that states the terms of sale for any services or goods that are sold to a third party. It can be easy to skip crucial details when a business is rushing to finish a transaction. Writing up an agreement will save money and time down the road, so it should be written up front. This is often used when services and goods are being sold that require delivery.
Definition of a Product Sales Agreement
In the agreement, the items should be described in detail and list the quality standards that all sellers must meet. The following details can be included:
- The process for if goods come late or don't arrive
- If the company doesn't get paid for the items
- If the price of the products suddenly changes
Often, it's too late when a company realizes they don't have anything besides a verbal agreement. Customers depend on having their products by a certain date. Some products may be back ordered, which is even more important to have a written process for how that works. Making sure the company gets paid on time is important, especially for small businesses who depend on that to have their mortgage paid on time. A product agreement will make sure all of these details are clear. This document may be known as a product contract or contract for sale of goods.
Use of Product Sales Agreement
The product sales agreement lists all the details that are in charge of the terms of the sale and condition. The main purpose is to protect sellers from expectations that are unclear, misunderstandings, and fraud. The agreement also protects the buyer by stating what is and isn't included in the sale and when the product can be sold. The document can be used for the following:
- If goods are being sold to another business
- If products are being bought from another business
- A company is managed where goods are bought or sold
Goods include a possession or physical items, such as an air conditioner, animal, computer, or car. Services are considered duties that are performed in return for compensation, such as installing a heater. When writing a sales agreement, make sure the service or item is clearly described. There should be a physical description and the number that's being sold.
Determining Payment Details
A payment plan will need to be determined in the service contract. This states how the buyer plans on paying the seller. Payment can be a certified check, bank draft, email transfer, cash, promissory note, or PayPal. The seller must give the buyer a receipt for any cash transactions. A certain amount of money that the buyer gives the seller is called a deposit. This is security to ensure they'll complete their transaction. If the buyer purchases the product, the deposit will be part of the purchase price. It can either be non-refundable or refundable.
Payment due dates should be listed in the sales agreement for both the deposit and the payment itself. This will make the details of the transaction clearer. The terms of where the products will be delivered can also be included. This can be at the seller's address, the buyer's address, or at another location. The seller can get paid once they've shipped the items, once the buyer has received the goods, or once the bill of sale gets created.
Difference Between a Bill of Sale and a Sales Agreement
The bill of sale and sales agreement have purposes that are very similar. However, a sales agreement has warranties on the products and has a more detailed payment plan. Both parties have more flexibility when they complete this agreement by writing down the terms of the agreement before the items are purchased. A bill of sale shows proof of who owns the item and that it has been transferred to another person.
Liability covers the products' risk of damage or loss. It can be transferred to the buyer once the buyer gets the goods, the goods are shipped out by the seller, or the buyer gets ownership through the bill of sale.
If you need help with a product sales agreement, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.