What Is a Wholesale Agreement?

Standardized Legal Documents What Is a Wholesale Agreement?

A Wholesale Agreement—The Whats, the Whys, and the Hows

If you don’t have a law degree, it’s no wonder that you’re confused about what a wholesale agreement is and how and when you should use it.

Instead of hiring a lawyer right away and wasting your time and money unnecessarily, let DoNotPay help you!

In this article, you’ll learn:

  1. What types of wholesale agreements exist
  2. How to use a wholesale agreement and for what purposes
  3. How to get DoNotPay to generate custom-made legal documents for you

Wholesale Agreements—The Two Definitions

The main reason why wholesale agreements may be confusing to you is that there are two different types of them.

A real estate wholesale agreement is a legally binding contract that details the terms and conditions of a real estate sale and purchase with the help of an intermediary. The intermediary is called a wholesaler, which is how the agreement got its name. When real estate investors use a wholesaler to sell a property, the practice is also called contract assignment. The intermediary assigns the original wholesale agreement to the end buyer. 

The other type of wholesale agreement is a contract that outlines the terms and conditions of a wholesale transaction. When used to buy or sell supplies, a wholesale agreement also goes by the following names:

  • Manufacturer agreement
  • Supply agreement
  • Distribution agreement
  • Merchandise sale and purchase agreement

Different Types of Wholesale Agreements in More Detail

When it comes to selling and buying real estate, wholesale agreements aren’t difficult to understand. Here’s how using wholesale agreements in real estate works:

  1. A property seller employs a wholesaler to market the property to potential buyers
  2. The wholesaler ups the purchase price to gain profit for themselves but also creates benefits for the seller, such as stripping them off their duty to repair damages
  3. A buyer agrees to the terms, signs the agreement, and purchases the property, releasing the wholesaler from any contract obligations

For a wholesale transaction, you need to establish what the minimum order quantities (MOQ) and minimum order value (MOV) will be for your deal. Here’s a table that explains what MOQ and MOV are:

Wholesale Transaction Details

What It Means

Minimum order quantityThe MOQ clause in a wholesale agreement states the minimum amount of goods a buyer should order and be ready to pay for
Minimum order valueThe MOV defines the minimum purchase price of the goods, which is then negotiable

If you are selling supplies, note that you can change the price of the order if you inform your client five days in advance.

You also need to establish whether:

  • You will allow the customer to return the items for a refund and the timeframe in which they can get their money back
  • The customer can place urgent orders, in which case you have the right to charge additional shipping costs

In any case, you should send the customer an invoice for the order that includes the payment deadline. If the customer doesn’t honor this deadline, you have the right to pause any further shipments.

When Do You Need a Wholesale Agreement?

If you are in the merchandise business and want to sell goods in bulk or for a wholesale price, you need a wholesale agreement. There are many details about the transaction that you need to determine and terms of sale that you need to agree on with the other party.

If the transaction details aren’t listed in a legally binding contract, you risk potential misunderstandings. 

A wholesale agreement that’s legal and valid is also the best way to protect your interests and receive reimbursement if the other party fails to honor the terms.

Can You Get a Wholesale Agreement Template?

You can find many wholesale agreement templates online. They are usually too complex to understand or don’t include all the clauses you need in your particular case.

If you want to draw up a wholesale agreement yourself, you can take a look at a regular sales contract and add these sections:

  • Minimum order quantity
  • Minimum order value
  • Exclusivity
  • Minimum commitment period

The exclusivity clause serves to establish a long-lasting business relationship with your client. If your wholesale agreement includes this clause and the customer agrees to sign it, they cannot order the same supplies from another merchandising company.

Did You Know That DoNotPay Can Get You a Custom-Made Contract?

In under a few minutes, our AI-powered app generates a 100% tailor-made agreement for you. When you , you can forget all about the inadequate and time-consuming contract templates and write your contracts in a flash.

We constantly update this feature so you have more and more legal documents you can generate with our app’s help. Here are some of the most popular ones our app creates for you:

How To Get Your Tailor-Made Contract With the Help of DoNotPay

The best part about using DoNotPay to create your customized legal documents is that it only takes you three short steps to do it. Here’s how it works:

  1. Enter the name of the document you want our app to generate 
  2. Answer a few key questions about your document

Now you only need to wait a few moments before DoNotPay has a completely personalized contract for you. You can e-sign and have the contract notarized using our other products and be done with the whole business in one fell swoop!

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Our AI-driven app comes in handy for numerous bureaucratic or administrative chores that usually take up a lot of time. With DoNotPay’s speedy service, even the most tiresome task will be complete in a flash!

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