ACROBAT FOR BUSINESS | 5-MINUTE READ
Sales contract: All you need to know about a sales agreement.
Create contracts and purchase agreements with Acrobat for business.
Sales contracts and their uses.
A sales contract is a fundamental agreement used in a wide range of industries to formalize the sale of goods or services. These contracts outline key terms such as pricing, payment conditions, delivery timelines, and warranties, ensuring clarity and legal protection for both buyers and sellers. Sales contracts are widely used in various scenarios, including retail transactions, real estate deals, wholesale supply agreements, and service-based contracts like consulting or freelance work.
What is a sales contract?
A sales contract is a type of agreement that parties on both sides of a transaction make, which outlines the terms of the sale of an asset. That asset can be services, goods, physical properties, or anything else that can be bought and sold. However, in most cases a sales contract is drafted for transactions involving goods or property, whereas services are more often governed by a statement of work (SOW) agreement.
Depending on state law and other guidelines set by the Uniform Commercial Code (UCC), sales contracts might require a wet signature (one physically signed with a pen), but most of the time that isn’t the case. A lot of the contracts today are digital documents and usually are sealed with an electronic signature on both sides.
What to include in a sales contract.
A good sales contract generally has four important components: definition of parties, description of goods and services, payment terms, and delivery terms.
1. Identify the parties.
Any sales contract begins by defining the identity of the parties. In a commercial agreement, this is usually your full name or the name of your company, and the name of the company or individual you’re doing business with. On top of this, the first part of the contract should state the date that the agreement is created and executed. Having tools that can help you track and manage signatures in this process is key to making good deals.
2. Describe the goods.
The next part of a sales contract defines what you’re buying or selling. These can often form legal covenants, or agreements to do or not do something as part of your contract. A detailed description of the goods, services (if they are also part of the deal), duration of those services, and closing dates should be defined.
3. State the price and terms of payment.
Because price is often such a hotly negotiated item in a sales agreement, purchase price and payment details should be put in writing as quickly as possible after you and your client have come to terms. This portion of the contract should define the time for payment, payment method, and payment schedule.
4. Deliver the goods.
The final aspect of a sales agreement puts in writing the date of delivery for the goods or services and includes clauses to address something going wrong in the delivery process, especially for events that might be disaster-related or out of control of either party.
Types of sales agreements.
Sales contracts come in various forms, each designed to suit different types of transactions and business needs. These agreements establish clear terms to protect both buyers and sellers. Common types include:
- Business asset transfers, where one party acquires ownership of an existing company.
- Real estate transactions, covering residential home purchases and commercial property deals.
- Material procurement, such as a bakery purchasing ingredients from a supplier.
- Vehicle purchases, whether an individual buying a car or a company acquiring a fleet.
- Equipment acquisitions, ranging from office computers to industrial machinery.
- Intellectual property transactions, including the sale of patents, trademarks, or publishing rights.
Understanding the different types of sales contracts helps businesses choose the right agreement to ensure smooth transactions and legal security.
Purchase orders.
Purchase orders are documents that buyers give to sellers before the sale to outline the overall details of the terms and conditions of the business relationship. They are often the beginning of the service contract process, where a seller receives one from a buyer to lay out the terms of a transaction.
Purchase orders are distinct from sales invoices, which are contracts provided by the seller to the buyer after a purchase order has been fulfilled.
Bills of sale.
A bill of sale is a legal document that shows the transfer of property and serves as a legally binding document showing the sale of goods. Note this is different from a promissory note, which is the promise to grant goods or services at a later date. Usually, the seller drafts the bill, which includes all the relevant information about the transaction. However, if the seller forgets, the buyer can draw up a bill of sale too.
For instance, after you sell a car to a buyer and the transaction is complete, you would write up a bill of sale showing the terms of the agreement between you and the buyer. Alternatively, the buyer could create one and have you sign it — either way works. This would show that you sold the car to them and it is now their personal property.
A bill of sale can offer additional legal protection not available with oral contracts.
Warranties.
Warranties are a subset of sales contracts. They’re often written agreements that are a guarantee about the product being sold. They often show that the company cares about the quality and lifespan of the product. Warranties often cover the following:
- Returns and refunds
- Repair in the event of damage to the item
- The quality and grade of the product
- The purchaser’s rights in relation to the product or property (usage rights, for example)
When you create a warranty contract, you’re making a formal agreement that lists the guarantees you give to your customer. These contracts need to explain the conditions the warranty holds true and also specify how long the warranty will remain in place until expiration. It’s a smart, safe choice to include this information because implied warranties can often snag companies that don’t cover their legal bases.
Keep sale contracts organized and secure.
While traditional sales contracts used wet signatures, now you can circulate contracts entirely digitally. To take advantage of this new technology, you’ll need a digital signature solution that works for both the sender and the recipient.
Adobe Acrobat for business allows you to completely digitize the entire agreement, ending with the signing process. It provides an easy way to rapidly update contracts and other documents on the go. When you pair it with the Adobe Document Cloud Library, you can access documents easily — and whoever you’re working with doesn’t need an account to esign contracts.
Acrobat offers ironclad security to protect both documents and the signatures on them. You can apply two-step authentication and domain keys, as well as remotely manage identity, authentication, and access.
For highly sensitive documents, there’s audit trail accountability, access control for specific users, and the ability to acknowledge and authenticate receipt of documents. Acrobat Sign meets industry-specific regulations for sign compliance, and by adopting this solution, you’ll be partnering with a trusted partner for risk reduction and compliance.
Keep exploring