Buying and selling: It’s an integral part of any business operation, from enterprise-level empires to mom-and-pop shops to side hustles. Behind every business exchange lies a sales agreement contract to keep everyone on the same page, and it’s an important business contract to have up your sleeve as an entrepreneur. Use our comprehensive sales agreement template below that you can refer to anytime you need an agreement:
What Is a Sales Agreement Contract?
A sales agreement contract is an official document between a buyer and seller that outlines the terms for goods, services, or property to be sold. It may detail a single transaction or an ongoing sales relationship between two or more parties.
You may also hear it referred to as a sales contract, an agreement to sell, a sale of goods agreement, or — on the buyer’s side — a purchase agreement.
Bill of Sales vs. Sales Agreement
While they may go by similar names, the difference between a bill of sales and a sales agreement lies in the timing. The team drafts a sales agreement contract prior to the sale, while a bill of sale occurs during the transaction.
A bill of sale may act as a receipt for future reference, whereas a sales agreement doesn’t provide proof a sale was actually made — it just outlines the terms of the sale-to-be.
Examples of When a Sales Agreement Is Needed
Sales agreements occur any time the legitimate sale of goods, services, or property occurs. Below are just a few examples of times when a sales agreement contract is needed:
- Real estate sales for homes and commercial properties
- New vehicle sales
- As-is agreements, stating pre-owned vehicles or property have not had any modifications, repairs, or improvements
- Supply chain agreements for businesses buying large quantities of material goods, either one-time or recurring
- Company share sales
- Asset sales as part of business acquisitions
Why Do I Need a Sales Agreement Contract?
As a seller, you need a sales agreement contract to ensure proper liability transfer for whatever goods, services, or property you’re selling. Without one, you may still be held liable for something outside of your knowledge and control. You may also be left hanging with excess inventory if the buyer decides to back out of the agreement at the last minute.
As a buyer, you need a sales agreement to lock in a certain price and the terms of delivery. Without one, you may be left with no inventory if the seller decides to hike up prices at the last minute or if they decide not to sell at all. Without goods to sell, angry customers will choose to shop elsewhere.
Who Prepares the Contract?
Either the buyer or the seller may prepare a sales agreement contract. If you’re a business owner selling goods or services directly to consumers or other businesses, you will typically be the one drafting up the contracts.
What Should a Sales Agreement Contract Include?
You can use Incfile’s sales agreement template to create your contract. Our template will ensure your contract includes all the necessary details, including:
- Business location
- Buyer and seller information
- Description of goods, services, and/or property to be sold
- Price and deposit details
- Payment details
- Delivery terms
- Liability details
- Agreement date
- Warranty statement (if applicable)
- Dispute resolution terms (if applicable)
- Amendments (if or how the contract may be modified)
- Assignment agreement (whether a party requires written permission to transfer their rights to another party)
- Severability provision (states that the remainder of the agreement will still be valid if one part is rendered unenforceable)
- Entire Agreement (a provision that states the written contract is the entire agreement and not subject to unwritten modifications)
Once you’ve drafted up your sales contract agreement, you may still have questions about what’s next. Here are some additional details:
Is a Sales Agreement Contract Legally Binding?
Yes. Like most contracts, a sales agreement is legally binding. If either the buyer or the seller fails to uphold their end of the agreement as outlined in the contract, the other party is entitled to legal protections.
Does a Sales Agreement Contract Need to Be Notarized?
No. A sales agreement contract does not require notarization, and it is still legally binding without it. However, both parties may choose to include it as an extra layer of protection, as a notary ensures the document is authentic and legitimate. Note that notarization may be required for the final bill of sale, depending on your state’s requirements.
When Does the Agreement Become an Actual Sale?
Note a sales agreement itself does not denote a completed sale. The sales agreement becomes an actual sale once the goods or services are delivered and properly paid for based on the terms of the contract. Once a sale is made, the bill of sale is created as proof of transaction.
For more handy templates to use in your business projects, visit our business contract library. Need even more business resources? Our resource library contains dozens of guides, checklists, infographics, and more to take your business to the next level.