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What Is a Sales Agreement?
A sales agreement is a legally binding contract that clarifies the terms of a transaction. Also known as a sales contract or an agreement to sell, this type of document generally involves two parties — the buyer is an individual or organization making a purchase, while the seller is an individual or organization selling the item in question.
You can use sales agreements to buy or sell either of the following:
- Goods : Physical objects, such as vehicles or machines
- Goods and Services: A physical item and related services, such as maintenance or installation
When Do You Need a Sales Agreement?
Without a sales agreement, you may not be able to protect your investment, or you may inadvertently accept liability for something out of your control. That's why you should consider using a sales agreement any time you buy or sell goods that require more than a simple transfer of ownership. If you intend to deliver the goods at a future date or if you want to transfer liability to the other party, a sales agreement can help you protect yourself or your business.
A standard sales agreement includes the following safeguards:
- The buyer agrees to purchase certain goods or services, and the seller agrees to provide the requested number of goods and types of services.
- The buyer agrees to make a purchase on a specific timeline, and the seller agrees to provide the goods and services on or by that date.
- The buyer agrees to pay a certain price for the goods, and the seller agrees to accept that price.
- Either party has recourse if the other violates the sales agreement.
Which Terms Should a Sales Agreement Include?
Although a sales agreement can have customized sections, it should typically include the following terms:
- Amendments: This element states the terms that both parties must follow to make any changes to the sales agreement, such as executing a written and signed agreement.
- Assignment: The assignment clarifies whether either party can transfer their rights to another party. This section may include terms for assignment, such as if the assigning party must have written permission.
- Buyer: This names the person who intends to purchase the goods or services.
- Delivery details: This section lists any addresses, dates, or other terms if the seller has agreed to deliver the goods or services to the buyer.
- Deposit: This element clarifies whether the buyer must provide a portion of the full amount as a partial payment and assurance that the transaction will be completed. A sales agreement should also state whether or not the seller may refund the deposit if either party cancels the contract.
- Dispute resolution: This element explains how the buyer and seller intend to resolve any disagreements that may arise. In most jurisdictions, options include litigation, arbitration, or mediation.
- Goods or services: The goods or services section covers everything involved in the transaction. A sales agreement may include an attached schedule that describes or lists the quantity of the goods or services.
- Governing law: This specifies which jurisdiction's law the agreement will follow in the event that the parties do business in different states or countries.
- Inspection: This states whether the buyer can examine the goods before the transaction is complete.
- Liability: This element confirms that the goods may experience loss or damage and clarifies which party takes responsibility for them throughout the transaction. The seller may transfer liability to the buyer at several points, including when they ship the goods, when the buyer confirms receipt, or when the buyer accepts ownership.
- Non-disclosure agreement: Also referred to as an NDA, this clause states that the buyer will not use the seller's intellectual property or data to produce the same or similar goods.
- Notices: These clarify how the two parties intend to communicate about the transaction, such as via mail or email.
- Ownership: The ownership section states when the buyer assumes ownership of the goods, which is typically upon delivery.
- Payment amount: Every sales agreement notes the full amount that the buyer owes the seller in this section.
- Payment dates: The date by which the buyer has to pay for the goods or services is also included. If the buyer has to make a series of payments, the sales contract may also include a payment timetable including amounts and dates.
- Payment method: This section specifies how the buyer can pay, such as with cash, a certified check, an electronic deposit, or a credit card.
- Seller: This names the person or organization that intends to sell the goods or services.
- Severability: This section states that all other aspects of the agreement remain valid even if one part proves unenforceable.
- Warranty: The warranty indicates the seller's guarantee regarding the condition of the state of the goods. Sellers can make a range of guarantees, such as claiming that the item has no claims against it or that it's in a reasonable condition for standard use. Sellers can also claim “as-is, which means that they make no guarantee about the goods' quality.
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Do You Need an Attorney for a Sales Agreement?
Although you can download and use a standard stales agreement as a contract, it's always in your best interest to contact an attorney. After all, a standard agreement may not provide you with adequate protection or shield you from liability. You can gain several advantages when you work with an experienced lawyer:
- Personalization: A knowledgeable lawyer can ensure that your sales agreement includes all the correct information, including optional clauses and disclosures. If you need to modify the language in a standard agreement, an attorney can ensure that it's legally binding.
- Liability: Any sales agreement you sign should limit the liability you accept during and after the transaction. An attorney can ensure that the contract limits your liability effectively.
- Protection : Whether you're the buyer or the seller, a sales agreement should offer sufficient protection. An experienced lawyer can confirm that your contract includes the right terms to ensure that you receive the stated goods, services, or compensation.
How Is a Sales Agreement Different From a Bill of Sale?
A sales agreement is similar to a bill of sale, but the two documents have important differences . Unlike a sales agreement, a bill of sale:
- Transfers ownership from the seller to the buyer
- Lacks a detailed payment plan or a warranty
- Includes fewer terms and provides less flexibility for either party
What Are Some Alternatives to a Sales Agreement?
Although a sales contract can apply to many transactions, it isn't always the ideal document for an agreement between two parties. Ask your attorney whether one of these standard agreements may be a better fit for your situation:
- Real Estate Purchase Agreement: If the buyer intends to purchase a home, a commercial building, or another piece of property from the seller, a real estate purchase agreement may better clarify the transaction.
- Purchase of Business Agreement: If the seller intends to transfer ownership of a business to the buyer, a purchase of business agreement can clarify each party's rights and responsibilities.
- Services Agreement: If the seller is providing services or consulting rather than goods, a services agreement or professional services agreement (PSA) may better outline the transaction and protect both parties.
- Promissory Note: If the buyer must borrow funds to purchase goods or services, the lender typically requires a promissory note, which includes a payment plan and terms.
No matter what type of sales agreement you need, the ContractsCounsel team can help. Get a free proposal and move your transaction forward with a legally binding sales contract.
Meet some of our Sales Agreement Lawyers
Most of my career has been as in-house counsel for technology companies. My responsibilities included managing all vendor/procurement contracts and compliance, customer/partner/reseller contracts and compliance, data security/privacy compliance and incident responses, HR/employment issues, and legal operations. I am very comfortable negotiating Commercial Contracts, Vendor Agreements, and Procurement Contracts for goods, services, and licensing, as well as addressing Employment & Labor, Intellectual Property, and Data Privacy issues and compliance. I specialized and have a certificate in IP in law school and continued to develop in that area as in-house counsel for Interactive Intelligence, Genesys, which are unified communication companies, and KAR Global in the automobile digital services lines of business.
Transactional and Employment Attorney and Small Business Owner. I do inside counsel work from the outside. I demystify the law for my clients.
Since 2008, I have worked to assist clients in solving problems and addressing challenges that inevitably arise as a business grows - both anticipated and unexpected. My experience in Georgia and Tennessee in both drafting contracts and enforcing them via litigation and/or arbitration has provided clients with unique insights that help them anticipate problems and inform their decisions from start to finish.
I am an attorney licensed in Alabama and have been in solo practice for 7 years. I have experience in Contracts drafting and review, Litigation and Immigration practice areas. I am available for new projects.
Meghan Thomas is an accomplished transactional attorney. She specializes in real estate transactional matters, property disputes, IP, tech and media contracts. Meghan's innovative leadership style has attributed to the firm's rapid development and presence in the metro-Atlanta market. She obtained her Doctor of Law from Emory University where she worked with the State Attorney General and litigated property disputes for disadvantaged clients. Prior to practicing, Meghan negotiated complex transactions for Fortune 500 tech and healthcare companies. She lives with her family in Southwest Atlanta, enjoys cooking, travel, dance and continues to develop her research in the areas of transactional law and legal sustainability.
With 15 years of extensive transactional/contracts experience reviewing and negotiating commercial contracts including a wide variety of purchase orders and contracts and non-disclosure agreements (NDA), I believe I can immediately contribute to the continued success of your team. I have been commended for a range of valuable skills—excellent contract management and contract administration, legal research, risk analysis, drafting and negotiations, and strategic thinking. I have worked as a legal consultant for 10+ years and I have reviewed over 7,500 contracts through this position. Contracts I have reviewed include but not limited to purchase orders, commercial and construction contracts, equipment rental agreements, non-disclosure, confidentiality, vendor agreements, service agreements, site access agreements, international agreements, request for proposals (RFP), bids and government contracts. These experiences have enabled me to master the ability to work independently and expeditiously to identify and assess issues and provide legally sound recommendations, consistent with good business practices. I have led teams (sales, insurance and management) to successfully negotiate contract terms with customers. Effective Communicator and Negotiator. I am a people person, and for the past 13 years, I have acquired excellent oral and written communication skills that enable me to interact and negotiate effectively with stakeholders at all levels. I am a self-starter with a strong work ethic. I have a high degree of resourcefulness, diligence, and dependability. Most important, I adapt to changing priorities quickly, thriving in an environment with high volume and short turnaround deadlines. My experience over the years allows me to transfer my skills to all types of contracts to meet the client’s needs. I am hopeful to provide similar legal expertise, effective contract administration and leadership to your organization. It would be a pleasure to meet within the next few weeks and discuss how my qualifications, experience, and capabilities will best fit the needs of your outfit.
Kerbis' practice includes business and real estate transactions, estate planning, and limited scope litigation consulting. Mathew has negotiated deals involving multinational corporate franchises and has collectively helped hundreds of clients with their transactional, civil litigation, and appellate legal needs. Throughout his tenure as an American Bar Association leader, Mathew has advocated for legal education reform, interviewed ABA Presidents and State Appellate and Supreme Court Justices, and lobbied Congress on behalf of the legal profession. As a law student, Mathew served as an extern for the Honorable Justice Robert E. Gordon of the Illinois Appellate Court, First District.