Standard Sales Agreement: Everything You Need to Know
A standard sales agreement is a written contract used to specify, outline, and clarify the terms of a transaction between a buyer and a seller.3 min read
A standard sales agreement is a written contract used to specify, outline, and clarify the terms of a transaction between a buyer and a seller. It helps both parties understand the details of the agreement, which can minimize the chances of a dispute in the future.
Information About a Sales Agreement
A sales agreement is a starting point and a guide to help you and your attorney create a contract that covers all the terms and conditions that will be relevant to your business transactions. A sales agreement may be referred to as a sales contract, buyer and seller agreement, sale of goods contract, purchase and sale agreement, or purchase agreement.
When creating a sales agreement, these basic elements need to be included:
- Seller: The full name of the person selling the goods/services as well as their contact information.
- Buyer: The same information is required for the person buying the goods/services.
- Goods/services: A thorough and detailed description of the goods to be purchased, including the amount to be purchased.
- Price: The price should be the total amount paid for the goods/services as well as any deposits or adjustments.
- Payment: The terms will be laid out stipulating how the seller will be invoiced and when the buyer will pay for the goods/services.
- Delivery: This section states when the buyer should expect delivery from the seller as well as the location where the goods/services are to be delivered.
- Warranties: This covers whether the seller is selling the goods/products "as is" or if there will be a warranty provided based on the condition of the goods/services. Warranties are legally enforceable guarantees to assure a buyer that conditions or facts regarding the goods are true.
- Inspection: Stipulates if the buyer has the right/option to inspect the goods/products within a specified timeframe.
- Risk of Loss: This section clarifies which party is responsible for the costs if the goods/services suffer any damage from the time they're shipped until they're delivered.
Contracts that sell goods priced at $500 or more must be in writing to be enforceable, according to the Statute of Frauds. For some sales contracts, the buyer has a statutory right to cancel the contract until midnight of the third business day after the sale.
For more information about the option to cancel the contract during the designated time frame, check the laws for your state and the Federal Trade Commission.
Difference Between a Sales Agreement and a Bill of Sale
A sales agreement and a bill of sale are similar, although a sales agreement can provide more detail and options in payment plans. It also provides warranties on the goods/product.
Sales agreements allow both parties flexibility in arranging terms that allow for goods to be secured before they are purchased. This can take place prior to the agreement being completed.
It is also mandated that sales agreements must be in compliance with state Uniform Commercial Code (UCC) regulations, which are currently effective in every state with the exception of Louisiana. For retail purchases over $500, UCC regulations require a written sales agreement, but a business owner may choose to include a written agreement with a sales receipt on retail purchases.
A bill of sale is a simpler form than a sales agreement. It is generally used as evidence to prove transference of ownership from one party to another.
Uses for a Sales Agreement
Regardless of the type of business you operate, it's important to have a written agreement to make sure your business runs smoothly until the goods/services and payment for the goods has been exchanged. It also ensures both parties have a clear understanding of what steps to take if there are any problems with the transaction.
- Sales agreements can be used for both buying and selling goods and services.
- Goods are a physical item or possession.
- Services perform duties in exchange for compensation.
- Goods and services involve the purchase of a physical item and supply an aid or service.
- A sales agreement can act as a sales receipt for a transaction.
A sales agreement provides a foundation and framework for all the steps in a complicated process. Without a sales agreement, the risk of not understanding contractual rights and obligations increases.
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