Having the right sales contract is crucial when doing business, especially when dealing with multiple customers and vendors. More than anything, it protects your business from unforeseen issues or differences in opinion that may arise between you and another party.
For example, if you’re purchasing property, you’ll need a property purchase agreement. If the buyer requests a customized payment option, it should be specified in a sales contract, usually called an “agreement to sell.” The terms can be outlined in the sales contract, which can then be registered on a legally binding document. It facilitates the transparent exchange of goods (property, in this case) and money between the buyer and seller.
Over time, the range and type of contractual agreements have evolved to reflect the many types of services and goods exchanged between buyers and sellers. This has given rise to many different templates for sales contracts.
Here, we discuss important elements of sales contracts. Then we examine seven essential templates provided by Revv and how they can help you position your business for success.
What is a sales contract?
A sales contract is a legal agreement between two parties (a buyer and a seller) that specifies the transfer of rights to goods or services. It can also be a contract that agrees to transfer the rights in the future (for example, see Template 3 below).
A sales contract is a legally binding document that protects the rights of the buyer and the seller. It should have the following four essential elements:
- Requirements that have been agreed upon previously and will be fulfilled later
- A description of the goods and identifying details of the parties
- A mandatory price element
- The detailed terms of the contract
A sales contract is bound by the statute of the corresponding country or jurisdiction and typically covers three concepts:
- An offer to buy goods for the stipulated price
- An offer to sell goods for the stipulated price
- An agreement with and acceptance of the offer
Statutes specify the type and nature of goods that can be transacted. Wheat crops, apparel, smartphones, and so much more can be bought and sold for a price. Both new and pre-owned goods are appropriate for a sales contract.
In the United States, sales contracts are governed by the Universal Commercial Code (UCC). State and county regulations may also apply. In India, the Sale of Goods Act of 1930 presents guidelines and requirements for sales contracts.
Why do I need a sales contract?
A sales contract serves as proof of an agreement between you and another party. While you can never be certain of a deal’s successful completion, having a sales contract in place provides greater security.
What are the advantages of creating a sales contract?
A sales contract can be an oral agreement or a physical document. Both businesses and individuals are advised to create a sales contract if they are dealing with a goods-for-money exchange. While sales contracts are critical for large corporations and unicorn startups, they can also help small enterprises and sole proprietors, regardless of the type and volume of the sale or purchase.
Here are some of the reasons that having a sales contract is important:
- A sales contract serves as a legally binding proof of agreement
- A sales contract can include special clauses and terms
- A sales contract is applicable to any kind of sale/purchase of movable property
- A sales contract provides security and protects the buyer and seller
What is the general structure of a sales contract?
Most sales contracts and templates contain the following elements:
- A description of goods with an indication that their sale is the primary intention
- Price (the agreed-upon cost of the goods)
- Identification of the buyer or purchaser (the one who pays for the goods)
- Identification of the seller (the one who receives money in return for the goods)
- Delivery specifications regarding the transfer of rights and physical handover
- The state of delivery
- Terms and conditions regarding contract violations and other considerations
- Special considerations that are not covered by law but are agreed upon by the parties
The last point is critical because a sales contract can be customized to reflect the needs of the parties. You are free to add special clauses as part of the terms and conditions as long as both parties agree to it.
Revv’s 7 Essential Sales Contract Templates
The vast private sector in the United States comprises all possible types of enterprises doing business across sectors in myriad ways and to various degrees. Thankfully, many types of sales contracts are available for business people to customize in accordance with their needs and U.S. laws.
Some types of sales contracts are used regularly by businesses, such as those buying raw materials from a vendor, selling wholesale products to a retailer, or even selling an entire business unit. The applications for a sales contract are limitless, but Revv’s seven sales contract templates will meet most of your needs.
1. General Sales Contract Agreement
This is the most common type of sales contract in the world. It has straightforward terms, information about the parties and the goods being bought/ sold, and pricing information. Most sales contracts are a variation of this template.
What a General Sales Contract does
- Allows the buyer and seller to communicate prior to the deal and record it
- Can be used as a working document for third-party processes, such as taxation
- Serves as proof of a deal and can be used for information-gathering during and after the deal
- Provides legal protection in case the deal is canceled or affected by uncontrollable, external factors such as death
What a General Sales Contract includes
- Name, address, and other identifying information for all the parties
- A description of the goods/services being bought/sold
- Terms and conditions as agreed upon by the parties
- Detailed clauses, if any
- Identifying information and signatures of the witnesses
- Payment terms or timeline, if applicable
- Reference to laws and statutes relevant to the business deal
- Supporting documents, if any
Revv allows you to customize the sales contract to reflect your business’ specific needs. Just select the template that most closely aligns with your requirements and then edit it to create a strong sales contract.
Below we describe another six templates, all related to the general sales contract.
2. Conditional Sales Agreement
A conditional sales agreement is a slight variation of the general sales contract. Although the name seems to imply that it is a contract with a set of conditions, in reality, the condition is related to the transfer of rights.
In the broadest sense, a conditional sales agreement is an arrangement through which a buyer takes possession of the goods but does not own absolute rights to them. Those rights remain with the seller until the payment has been made in full. This arrangement is similar to the way in which a home buyer receives a mortgage and takes possession of the house but does not own it until the mortgage has been repaid with interest.
Conditional sales agreements are popular around the world as they allow payment in installments and establish a long-term timeline for the deal. This type of agreement is commonly used to purchase a new apartment directly from the builder, to secure a mortgage for a home, to purchase laptops for office administration, and to finance (lease) industrial machinery.
What a Conditional Sales Agreement does
- Allows the buyer to take possession of the goods before full payment
- Allows the seller to retain the rights temporarily, giving the seller the upper hand in the contract
- Allows the seller to take back possession if the buyer defaults on payment
- May include a detailed payment schedule and terms
- Provides tax sops for both the buyer and seller
- Provides financial leverage for the buyer as the goods can be used before full payment
- Assists buyers with poor credit scores
- Protects the seller in case of payment default or external factors
- Facilitates the repossession of goods in case of payment default
What a Conditional Sales Agreement includes
- A detailed description of the goods
- Payment terms (the most critical element)
- A description of interest as agreed upon by the parties
- Delivery terms and timeline
- Terms of total possession, including the transfer of rights
- Terms governing repossession in case of payment default
A real estate deal is a perfect example of both a conditional sale and an agreement for sale. It provides flexibility for both the buyer and seller in terms of possession, repossession, and payments. Another example is when people rent cars and home appliances. Buyers can easily make a small down payment, sign a conditional sales agreement, and take the goods home. The agreement provides a convenient way to do business with some enterprising features.
Revv makes it easy to quickly create a conditional sales agreement and ensure that your business continues running smoothly and with legal protection.
3. Agreement for Sale
This is another type of legal agreement between two parties that records the intention of a buyer and a seller to exchange goods in return for a price. Such contracts are mostly associated with real estate deals and are usually followed by another sales contract and registered documents. Use this template if you are buying or selling property, such as a piece of land or an apartment.
Such contracts can also be used by individuals. For example, an advertising professional wanting to buy an apartment for himself and his partner in Brooklyn can enter into an agreement for sale with a construction company (builder) or another individual (previous owner). Either way, the contract allows him to outline the terms of payment and ownership. This is a convenient way to carry out real estate deals and protect oneself against scams and hidden charges
What an Agreement for Sale does
- Serves as an agreement before the sale has been carried out
- Allows the parties to negotiate and agree to specific terms
- Presents clauses and time-bound conditions
- Allows the buyer to outline conditions on which final execution will depend
- Acts as a precursor to a sales deed
What an Agreement for Sale includes
- Basic identifying information, such as the name, address, and SSN of the buyer and seller
- Date, place, and other identifying details
- A description of the goods/services being bought/ sold
- Pricing details
- General conditions subject to applicable regulations
- Assumed responsibilities of both buyer and seller
- A detailed schedule of payment and purchase, if any
- Signatures of parties and witnesse
An agreement for sale essentially gives you the right to engage in an exchange. It acts as a cushion for the property exchange and protects the rights of both the buyer and the seller should any issues arise.
4. Contract of Sale of Business
The contract of sale of business, also known as the sale of a business or business transfer agreement, is an agreement that parties enter when they want to buy/ sell a business. Any form of business (e.g., a retail store, restaurant, graphic design agency, e-commerce startup) can be bought/sold by anyone.
These contracts help parties specify the type of purchase. For example, if a businesswoman wants to buy a company, she may choose to buy all the company’s assets and 100% of it shares, or she may choose to buy part of the assets and a certain percentage of the shares while effectively retaining some of the company’s current management. All sorts of arrangements can be made, making this one of the most flexible types of sales contracts
A typical business sales contract covers the following assets: inventory, ledger, equipment, machinery, office space, records, and even trademarks. Securities and cash balances in banks are usually handled under another section.
What a Contract of Sale of Business does
- Allows a person or a business to buy an entire company or parts of it
- Presents special clauses
- Facilitates corporate mergers and acquisitions
- Applies to all types of business, regardless of size
What a Contract of Sale of Business includes
- he type of sale (e.g., assets, liabilities, shares)
- A detailed description of the transfer of rights
- Cost and other assumed liabilities for the buyer
- Payment details and timeline
- Miscellaneous terms governing the timeline of the deal
This type of contract usually includes a confidentiality agreement, a business plan, a partnership agreement, and a real estate purchase agreement. Buying/selling an entire business is complex, with many moving parts; therefore, it is important to create a detailed, foolproof sale of business contract that avoids any ambiguities
As you review Revv’s contract templates, our experts are prepared to help you craft the ideal sale of business agreement.
5. Sales Contract Addendum
Consider a marketing agency that has already entered into an agreement with a fashion e-commerce portal. The agency has been providing internet marketing services for the portal for more than five years. However, the portal now has a specific requirement that requires special expertise. While the agency has that expertise, it cannot be covered by the existing sales contract, which is a monthly retainer. Editing the current agreement would be equivalent to creating an entirely new contract. What is the best solution in this case?
A contract addendum can be useful in this situation. It is a type of auxiliary agreement that can be attached to any existing sales contract. It provides a hassle-free way to expand the scope of work without having to go through the painstaking process of executing another contract.
In the aforementioned example, the marketing agency simply created an addendum, sent it to the client for approval, and attached it to the existing sales contract. Since the addendum had a fixed, two-month term, the client was billed accordingly and then the parties went back to the original contract.
What a Sales Contract Addendum Does
- Allows businesses to add clauses, expand the scope of work, and/or add payment terms without changing the original contract
- Requires a host contract in order to be legally binding
- Can be a single-page attachment to another contract
What a Sales Contract Addendum Includes
- Detailed terms and conditions with reference to the original contract
- The timeline and contract term
- Pricing
- Closure details to avoid creating a perpetual agreement that extends beyond the term of the original contract
6. International Sales Contract
An international sales contract is another widely used template. It binds two parties (buyer/seller, importer/exporter) with a set of rights and obligations throughout the contract term.
An international sales contract differs slightly from most others types of sales contracts as it reflects the laws of the countries in which both parties are based. For example, if a U.S. businesswoman is dealing with an Indonesian exporter, the agreement must reflect the statutes of both the United States and Indonesia. An international sales contract will cover any differences in the laws between those two countries and establish a middle ground.
Both parties must negotiate and accept clauses that reflect jurisdictional differences. Such contracts are largely governed by the United Nations Convention on Contracts for the International Sale of Goods (CISG), which already has a general framework in place known as the Vienna Convention. Effective since 1988, it is widely supported and used by most countries.
The CISG framework has several articles and sub-statutes that cover a wide range of conditions and formats.
What an International Sales Contract Does
- Facilitates detailed discussions about communication and agreement clauses
- Serves as an internationally binding legal document
- Serves as a working document for process-related activities (e.g., bookkeeping, taxation)
Essential Elements to Include
- A description of the goods/services being bought/sold
- Contract price (usually in more than one currency)
- Delivery terms
- Shipping terms
- Conditions about insurance coverage.
- Customs and import duties
- Payment conditions and schedule
- Terms governing inspection and acceptance of goods after purchase
- Retention of title, which delays the rights exchange until the buyer has paid the full amount
- A force majeure “hardship” clause that protects the seller in case goods/services are damaged during transit due to circumstances beyond their control
- Terms for dispute resolution
Although English is the official language of commerce, an international sales contract is usually in multiple languages.
Such contracts are complex. For example, if the contract price is specified in a particular currency, but the exchange rate changes between the date of contract execution and the date of payment, conflict may arise. Therefore, such considerations should be sorted out and agreed upon by the parties before they enter the contract.
7. Automobile Sales Contract
Given the popularity of secondhand vehicle ownership, a sales contract designed specifically for automobiles is helpful. This contract allows independent buyers and sellers (or buyers and companies) to buy and sell used vehicles while specifying all the terms and conditions of the sale.
An automobile sales contract, which is different from the bill of sale created during the purchase, serves as a prior agreement between a buyer and seller. Its terms cover payment, handover of the vehicle, and insurance. Since a change in vehicle ownership requires a formal transfer of rights in the form of vehicle registration, it is critical to record such an agreement before buying or selling, or leasing a vehicle.
For example, a person buying a used car must first decide whether to purchase it from an individual owner or a company. In either case, the buyer can enter into an automobile sales contract with the seller and initiate the deal. Having a sale agreement provides a sense of security over any advance that he may have paid. The contract can also indicate whether he plans to secure a loan for the purchase.
An automobile sales contract can be used to buy and sell all types of vehicles, including cars, SUVs, motorcycles, trucks, and buses. Heavy-duty vehicles such as bulldozers, locomotives, and forklifts can also be transacted this way.
What an Automobile Sales Contract Does
- Serves as a binding document before the actual sale
- Authenticates the exchange
- Allows the buyer and seller to outline special clauses and terms
- Serves as proof of sale for the transfer of registration and insurance
What an Automobile Sales Contract Includes
- The negotiated price of the automobile
- Delivery (handover) details
- Warranties provided by the seller (e.g., insurance, vehicle condition)
- Buyer’s obligations, such as the payment schedule
Such contracts also include an arbitration clause governing how the parties may resolve conflict. The contract should cover the sale process, timeline, payments, and handover details. This allows both parties to use the agreement as evidence of what they agreed to.
Document Assistance by Revv
Many businesses struggle while handling all these documents. Often businesses find that the need to create and track multiple sales contracts simultaneously is cumbersome. Document handling can place a tremendous demand on time and resources, especially for a small business.
Revv simplifies matters. As a proven document management tool for small businesses, Revv handles all the paperwork and lets you focus on your core business operations.
With Revv, you get access to templates for everything—from agreements to proposals to quotes. Just select your preferred document type and template, edit it based on your requirements, and sign it. It is like having a virtual assistant for all your documentation needs.
When you edit within Revv, you don’t need any design or formatting skills. Just add the details, and Revv does the rest for you. Revv provides professional templates, a large document repository, and ways to collaborate with your business partners, vendors, and customers, as well as seamless integrations with other popular tools.
The Power of Revv Templates
Revv gives you complete control over your documents, delivering many advantages for you and your business:
- A large number of professional templates to choose from
- Easy tools for drafting, editing, and signing contracts
- No requirements for skills in design or document management
- App and tool integrations
- Clause management, currency support, and pricing models
- Block-based contract building for easier drafting
Frequently Asked Questions (FAQs)
- Do I have to enter into a sales contract?
Whether you need to enter into a sales contract depends on your type of business, the country you are based in, and the country’s laws. Even if recording a sales contract is not mandatory, it is highly recommended as a way to protect your rights. Individuals, small businesses, and large corporations all benefit from recording agreements for all types of deals.
- How much does a sales contract cost?
Creating a sales contract doesn’t have any intrinsic cost if you write it on your own—but it’s advisable to create the contract with an expert or a tool like Revv to avoid problems. If you use a management tool for direction and organization, there will be a nominal monthly or annual fee. Revv plans start at just $15 per month, but there is also a free plan for essential documents.
- Do I need a lawyer to create a contract?
No, you don’t need a lawyer to create a sales contract. But you will need support regarding the content of the agreement—especially if you are just starting your business.
A lawyer can help you understand the laws and regulations governing the sale of goods in your jurisdiction. If you are looking for this type of information, you should seek legal counsel.
- Is there an age limit for being a party in a sales contract?
Yes, in most countries the minimum age for entering a contract is either 18 or 21 years. Underage applicants are deemed to lack “contractual capacity.” Check the minimum age for doing business in your jurisdiction before creating a contract.
- What happens if I make a mistake in my sales contract?
If you find that you’ve made a mistake in your sales contract, you have two options: You may choose to create another one, or you can add a note to the existing contract if all the parties agree to it.
- Will a mistake in a contract affect its enforceability?
In most cases, no. However, if the mistake was made for the sole purpose of defrauding the other party, it could be used as legal evidence for litigation. Typos and clerical errors do not usually affect enforceability, but it is better to avoid them. Revv can help you create polished contracts that are thoroughly proofread and fact-checked.
- Does the contract have to be in writing?
No, contracts don’t always have to be in writing. In many cases, you can have an oral agreement. However, in the United States, the law mandates that some types of contracts be in physical form. Having the contract in writing also helps to make it enforceable in the courts.
- What does “Goods in Exchange” mean?
“Goods in Exchange” simply means that the buyer and seller exchange goods with each other instead of exchanging goods for money. The phrase refers to the age-old barter system that is still common in some parts of the world.
- Who is responsible for the risk of loss in a sales contract?
The risk of loss is usually borne by the seller. However, both parties need to reach an agreement on this before they enter into the contract.
- Do witnesses have to sign my sales contract?
No, witnesses are not mandatory, but they are highly recommended. Witnesses’ signatures strengthen the document should it be challenged in court.
- What is a deposit?
A deposit, also known as a “security deposit,” is a sum of money paid by the buyer to the seller as an advance for the goods. This is usually paid upfront. The seller has the right to retain the deposit if any issue arises with the sale or the payment.
- What types of sales contracts are available with Revv?
Revv has a full repository of sales contracts and other documents. Some of the most popular types are business proposals, purchase orders, operating agreements, service contracts, sales commission agreements, and commercial proposals.
When You’re
The seven templates discussed above will cover most of your business requirements, but be aware that these documents vary across industries and tend to evolve over time. The ongoing COVID-19 pandemic is a perfect example of this as businesses want to insert additional clauses to safeguard their rights. This is to help them control the volatile nature of their business and help them maintain their interests.
In these situations, Revv serves as a support system for businesses around the world. With Revv, you can edit and draft a sales contract that reflects your terms. And, if there is a need to change something, you can always go back and edit the document.
Experience the power of real-time, online document management with Revv. Schedule a demo today.
