What does a sales contract cost? If you are entering into a transaction that involves a buyer and a seller, you may want to know how much this contract will cost. Let’s explore this question and review some general information about sales contracts and how they work.
How Much Does a Sales Contract Cost?
A sales contract, also known as a sales agreement, purchase agreement, or sale of goods contract, is a legally binding agreement between a party selling an item and a party buying an item. Sales contracts can also be executed for services provided by one party to another.
The sales contract records the goods or services exchanged between parties and payments made for the goods or services. Most sales contracts will include the parties' names, the service or item being sold, and the purchase price.
Sales contracts are important for both large- and small-scale sales and purchases. They are used in expensive real estate transactions and small transactions like the private sale of used furniture.
According to the Uniform Commercial Code, any transaction over $500 needs to be in writing to be enforceable. Many states have adopted this law in some form.
Suppose you need a written sales contract, especially for an expensive purchase. In that case, it is recommended that you hire a lawyer to draft the contract. A contract lawyer will know what needs to be included in your sales contract to make the agreement legally binding. If the contract is poorly written or doesn’t contain all the necessary terms, you could suffer financial consequences.
Based on ContractsCounsel’s marketplace data, the average cost of a project involving a sales contract is $600.
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What’s Included in a Sales Contract
Sales contracts will vary depending on the service, goods, or sold item. For example, a real estate sales contract will look very different from a sales contract for landscaping services.
Even though sales contracts vary, they still must include all the legal elements of a valid contract and should also have these common elements:
- Parties. Both parties should be identified with their full name or business name and address. In addition, the contract should specify which party is the seller or service provider and which party is the buyer or receiver of services.
- Description of the goods or services. The sold item or services provided should be clearly stated and defined. For example, suppose a vehicle is being sold. In that case, the sales contract should state the year, make, model, and any other identifying features like the condition. Likewise, suppose a service is being provided. In that case, it is important to include the scope of service and any important start or end dates.
- Payment. Payment in a contract is called “consideration” and is necessary for a legally binding contract. The amount owed and how it is to be paid should be clearly defined. This can include a down payment, a payment plan, or a form of payment accepted like “cash only.”
- Delivery of goods. Certain items like a car or furniture may need to be delivered to the buyer. The terms of delivery should be included in the sales contract. Specific details like delivery cost, time, place, and liability for damages should all be addressed.
- Warranties . A warranty guarantees that a seller makes a buyer that the item being purchased meets the expected level of reliability. This legally enforceable guarantee can be made as an express or implied warranty. An express warranty is an affirmative statement about the quality of the goods; for example, “the car starts and runs without any issues.” An implied warranty is an unwritten guarantee like the assumption that the car you are about to buy will work properly. These warranties can be written or oral, but it is always better to have the warranty written into the contract.
Why Do I Need a Sales Contract?
Sales contracts are important for several reasons for both large and small transactions. If you are a company that provides services, a sales contract helps increase transparency with your clients. The scope of your services and cost for services will be represented.
A correctly written sales contract will be legally enforceable. This protects both parties and compels both parties to adhere to the contract terms. If either party fails to uphold their end of the bargain, the injured party can seek legal relief.
Types of Sales Contracts
There are several different types of sales contracts. If you have ever purchased anything, you have been a party to a sales contract, even if you didn’t realize it. Every time you purchase an item from a store, you enter into a sales contract even if it isn’t in writing.
The seven most common types of sales contracts are:
- General Sales Contract. A written contract between a buyer and a seller.
- Conditional Sales Contract. The buyer takes possession of the property but doesn’t have exclusive rights to the property until the purchase price is paid in full.
- Agreement for Sale. Most commonly seen in real estate transactions, this sales contract is an agreement for a seller to sell a property to a buyer under specific terms.
- Contract of Sale of Business. Suppose a business is an item being sold. In that case, the parties need a sales contract that includes all provisions related to selling a business.
- Sales Contract Addendum. A supplementary agreement added to an existing contract.
- International Sales Contracts. These contracts are executed between parties who are in different countries.
- Automobile Sales Contracts. A sales contract for the sale and purchase of a vehicle.
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Sales Contract Drafting
Sales contracts are important documents because they lay out the terms and conditions surrounding a sale or transaction between two parties. Without a valid sales contract, both the buyer and the seller are at risk of financial harm if either party misrepresents an item or fails to uphold their end of the bargain.
For these reasons, it is common for individuals or companies selling or purchasing goods to hire an attorney to draft a valid sales contract.
An experienced attorney will know the contract laws in your state and be able to create a document customized to your needs that protects both you and the other party in the transaction.
Sales Contract Review
It is typically for the seller or service provider to provide the sales contract for a transaction. If you have been asked to sign a sales contract, you should fully understand what you agree to and what obligations you must fulfill. Before signing a contract, it is recommended that you have it reviewed by your own attorney.
A contract lawyer can review the terms of your sales contract and make sure that it is a fair and legally enforceable contract. Your lawyer will be able to explain the contract to you, so you are fully aware of all your obligations.
Sales Contract Drafting Cost
You will incur legal fees if you hire a lawyer to draft a sales contract. In addition, a lawyer will charge for the time it takes to draft the contract in may include additional fees for consultations and communication.
ContractsCounsel’s marketplace data shows sales contract drafting costs to be $580 across all states and industries.
Sales Contract Review Cost
If you choose to draft your own sales contract or you must sign a sales contract that has been provided to you, you can hire a lawyer to review the contract. A lawyer will charge for their time reviewing the contract, but the fees are typically less than drafting fees.
ContractsCounsel’s marketplace data shows the average sales contract review costs to be $610 across all states and industries.
How Do Lawyers Charge for a Sales Contract?
Hourly Rates for Sales Contracts
Hourly rate fee structures are a common way for lawyers to bill clients. Under an hourly rate, the lawyer will keep track of their time working on the project and then bill the client for the total number of hours at a predetermined hourly rate.
This fee structure ensures that the lawyer is paid for their time, even if the case takes longer than expected.
ContractsCounsel’s marketplace data shows the average hourly rate for a sales contract lawyer ranges from $200 - $350 per hour.
Flat Fee Rates for Sales Contracts
It is common for a lawyer to use a flat fee billing structure when hired for a specific project like drafting or reviewing contracts. Under this fee structure, the lawyer will provide their client with a flat fee quote for legal services. The client is typically required to pay this fee upfront and usually will not incur any additional fees.
ContractsCounsel’s marketplace data shows the average flat fee rate for a sales contract is $600.
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