Do you plan to buy or sell something, including products and services? It's always recommended to establish a written piece of evidence with the other party involved. To get an upper hand in case of any feud or fraud, this evidence acts as a means of resolving the issues. This legal evidence is termed as a contract. There are various types of such contracts, one of them being a sales contract.
What Is The Sales Contract?
Like most business contracts, a sales contract is a legally binding agreement between two parties of contract namely the buyer and seller. This contract is valid on the purchase of assets (goods or real estate property). It legally binds the buyer (purchaser) and the seller (vendor) to the terms of sales and the rights and duties to be performed by each party in a transaction.
A sale contract should be signed by both parties involved in the contract to make it legally enforceable.
When Do I Need A Sales Agreement?
A sales agreement is needed when you are either a purchaser of the property or a seller of it. As a buyer of a property, it's very important to enter into a sales contract before fixing the final deal. You should know the various terms of the sales agreement before signing the dotted line.
What Is Covered In A Sales Agreement?
The process of buying a property is comprehensive. You may put a lot at stake by not entering into a sales agreement. Typically, a proper sales agreement template covers the following aspects:
When the sales agreement is based on buying and selling of goods:
- Description of goods
A sales contract includes a wide description of goods. This enables the buyer to refer to the sales contract in the future if the delivery of goods is not meeting the standards as mentioned in the contract.
- Delivery instruction
It is important to mention the date, time, and place of delivery of goods. It should also mention the required action taken in case of loss of goods and during transit.
- Inspection period
It is an important part of the sales contract in favor of the buyer. The inspection period is necessary for the buyer to inspect the condition of the goods delivered. The inspection period depends on the type of goods delivered. Perishable goods usually have a shorter inspection period than other types of goods.
- Warranty and guaranty
A sales agreement should also cover the clear terms of warranty and guarantee provided by the seller on the goods purchased. The warranty and guarantee of the goods vary from industry to industry.
- Payment details
This part of the sales contract should include the final price of the goods sold, method of payment, payment installment and other details. It should also mention the desired action taken in case of failure or delay in making payments.
When the sales agreement is based on buying and selling property:
- The final purchase price of the property
- The complete name and addresses of the parties involved
- The address and necessary legal description of the property
- The final closing date/termination process of the contract
- The inspection and financing details of the property
- Action in case of delay or failure to perform
- The amount to be paid on execution
- Title of the property
- Terms related to the limitation of liability
Apart from these, a sales agreement could also cover other important details according to the needs of both parties.
Consequences Of Not Using A Sales Agreement
Both parties to the contract may face severe consequences if they choose not to enter into a valid sales agreement.
For the seller of goods/property:
- On the failure of payment by the purchaser, the seller would have no means to sue the buyer for not making the payment on time or at all.
- There will be no clarification as to what will happen if the buyer is not satisfied with the title of the property. Will the balance money be paid or not?
- What will happen if the buyer chooses to end the contract in between? How will a seller seek compensation for damages without a sales agreement?
- In case of failure of the buyer to get a loan, how will you allow the buyer to renege the agreement?
- There will be no clarification or means to issue a legal notice to a buyer
For the purchaser of goods/property:
- How will the buyer sue the seller in case they choose to backtrack from selling the property/goods
- The purchaser cannot claim the damages if the seller begins to fall back from its promises
- The purchaser would have to no one to seek damages if the seller makes defaults in the title of goods/property.
There are a variety of risks involved if you choose to buy and sell goods and property without entering into a sales agreement. The sales agreement provides clarity to both the parties which can help in settling a feud, should the need arise.
If you are a seller or buyer and looking forward to entering into a sales contract, a sale agreement deed is the first thing needed. With CocoSign’s contract templates, there is no hassle of making a sales contract. Our simple purchase agreement is free to download and use. Check it out now.