Learn All About a Sales Contract

Standardized Legal Documents Learn All About a Sales Contract

Sales Contract Essentials—Protect Your Interests

Whether you are a buyer or a seller, you should know what a sales contract looks like and why you are signing it. 

Though it may seem like legal documents are complicated and you can’t possibly write a contract on your own, that doesn’t have to be the case. You can learn the essentials of sales agreements, look up several contract templates, and use DoNotPay as your guide.


What Is a Sales Contract—A Simple Definition

A sales contract is a legally binding document between two parties—the buyer and the seller. The contract lists the terms of the transaction between two parties. You can sign a sales contract whether you are buying or selling goods, services, or property.

Other names for a sales contract are:

  • Purchase agreement
  • Sales agreement
  • Sale of goods contract

Depending on the parties and the description of goods, a sales agreement can have various clauses.

Do You Need a Sales Agreement?

You don’t need to be an owner of a large company to negotiate and sign a sales agreement. If you want your transaction to go without issues, the best course of action is to draw up a legally binding document, negotiate its terms with the other party, and sign it.

The most common situations that require a purchase agreement are:

  • Selling and buying real estate
  • Making a large transaction
  • Buying or selling goods and services for a large amount of money

The rule of thumb is to use a sales contract if the payment for the exchange goes over $500.

Why Do You Need a Sales Agreement?

A sales agreement is a way to make sure you will benefit from the transaction you’re making and that your terms will be met. For example, if you are the buyer, signing a sales contract under agreed-upon terms means the seller is legally responsible for delivering the goods, services, or property to you. If you are the seller, using a purchase agreement means that the buyer must pay for the delivered goods, services, or property within the agreed-upon period.

In case you’re uncertain whether to negotiate a sales agreement with your partner, here are the two biggest advantages and disadvantages:

Pros Cons
  • Defining your terms and ensuring they’ll be met
  • Reducing the risks of a lawsuit
  • Failing to negotiate the terms that both parties will be satisfied with
  • Losing much time and money in the process

What Terms Do You Need To Negotiate for a Sales Contract?

Whether you decide to draw up a sales contract on your own or hire a lawyer to do it for you, you need to know what it consists of.

The essential elements of a sales agreement are:

  1. Parties’ names and the date
  2. Description of goods, services, or property
  3. Payment plan
  4. Delivery
  5. Legal repercussions

Who Are the Parties, and When Is the Contract Executed?

The first clause in your sales agreement identifies the parties that are making the transaction. State your company’s name—or your name if you are an individual buyer or seller—in the first clause.

This section should also include the date when the contract is signed.

What Are the Goods or Services?

The description of goods and services is the essential clause in a sales contract. It details all the necessary information about what the buyer is paying for. The more detailed description you have in your contract, the more chances the transaction will go smoothly. 

When Does the Seller Expect Payment?

The payment plan is the second most important clause in the sales contract. In it, you and your partner should negotiate and agree upon:

  • Amount for which a sale will be made
  • Time when the seller will be paid
  • Possibility of paying in installments
  • Payment methods

When Does the Buyer Expect Delivery?

A delivery clause details the time, money, and method of delivery. You should first agree with your partner about the legal ramifications of a failed delivery. 

Including a force majeure section in your contract is also a good idea. It is a bonus clause that lists the conditions under which delivery doesn’t have to be executed due to circumstances outside of control of both parties.

What Are the Legal Repercussions of Breaching the Contract?

Any legally binding contract should detail the repercussions parties will have to suffer if they fail to honor the terms of the agreement. 

Learn To Draw Up Legal Documents With DoNotPay!

If you are an owner of a company that buys supplies or sells goods and services, chances are you have to deal with more legal documents than a sales contract. The good news is that you don’t have to spend effort and huge amounts of money on drafting all of them yourself.

DoNotPay can draw up many contracts for you automatically. You only need to:

  1. Log in to your DoNotPay account
  2. Provide the name of the document you need
  3. Enter the necessary information for the document

DoNotPay will create your contract in a heartbeat.

Here is the list of all the legal documents DoNotPay can generate:

Getting any of the above documents drawn up with DoNotPay is easy and quick. This experience can give you a head start with drafting legally binding contracts and help you create a sales agreement on your own.

Is a Sales Agreement the Same as a Bill of Sale?

You may confuse a sales agreement with a bill of sale, but they are not the same. The former outlines the terms of sale—like payment plans or legal repercussions—whereas the latter is a certificate of transfer of property.

You can compare a bill of sale to a receipt you get when you buy goods in a shop. It is legal proof that the ownership of the property has been transferred from one party to another.

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