A Sales Agreement is a specific kind of legal document that lays out the terms and conditions of a transaction. Because it sometimes imposes conditions on the parties, it is more extensive than a bill of sale or simple sales receipt. Sales agreements are sometimes called “Sale and Purchase Agreement”, and generally cover the sale of goods rather than services.
Each jurisdiction may have different rules regarding sales agreements. This is because each state or county may have different needs and features when it comes to the exchange of goods. Also, sales agreement requirements can often vary depending on whether one or more of the parties is a professional merchant.
Sales agreements are usually set up for the purposes of helping the buyer and the seller deal with foreseeable increases or decreases in factors like product demand and product costs. They are often used in the business sales and supply departments for larger publicly traded entities. They may outline the different obligations that both the seller and the borrower have in relation to one another.
For example, a sales agreement may dictate that a supplier of goods will provide the buyer with a set quantity for a number of months or years. In turn, the buyer might promise not to do business with other suppliers for that type of good. Sales agreements are also common in the real estate industry.
A good sales agreement should contain all the basic information related to the transaction including: Names and contact info of the parties; sales quantities and prices; description of the goods to be transferred; terms of payment and shipping; and return policies. In addition, the following information can also be included:
- Warranty information for damaged or defective goods
- Time periods in which the buyer can inspect or “try out” the product
- Which state laws will govern the sales agreement (business laws can vary by state)
- Whether the parties can resort to litigation or alternative dispute resolution in the event of a dispute
- Whether the sales agreement is subject to renewal, modification, or amendment
Lastly, the sales agreement can also include a provision stating whether the agreement is to be the only legally binding document for the transaction, or whether others documents may be referenced. In most cases, the agreement should to be signed by at least two witnesses, though state laws may vary regarding witness requirements.
A valid sales agreement is essentially a form of contract that creates a legally binding relationship between the parties. Violating the terms of a sales agreement may constitute a breach of contract, which may then lead to various legal or equitable remedies. These can include a monetary damages award, or an injunction requiring the breaching party to perform their duties.
Sales and purchase agreements are very important for the success and legality of any business transaction. You may wish to speak with an attorney if you’ll be needing help writing or editing a sales agreement. Your lawyer can be present during negotiations to ensure that the opposite side is acting fairly and reasonably. Also, if a legal dispute arises, your business attorney can help represent you during legal proceedings.