What is a sales agreement?
A sales agreement (or sale of goods contract) is a written contract between a seller and a buyer that sets out what is being sold, the price, how and when it will be paid for and delivered, and what happens if the goods are faulty. It is used by manufacturers, wholesalers, retailers, makers and individuals selling products in bulk, custom-made items, equipment or stock.
Many countries have default rules for the sale of goods (in the US, for example, Article 2 of the Uniform Commercial Code), but those defaults may not match what you intend. A written agreement lets you choose your own terms on payment, delivery, risk and warranties, within what the law allows.
Sales agreement, bill of sale or purchase order?
| Document | What it does | When to use it |
|---|---|---|
| Sales agreement | Sets the terms of a sale before it happens | Business sales, bulk orders, custom goods, deposits, deliveries |
| Bill of sale | Records that ownership has passed | One-off sales of used items such as a car, boat or equipment |
| Purchase order | The buyer's formal order | Routine orders from a supplier |
Selling a single used item for cash? A bill of sale is usually simpler. Buying from a supplier? Start with a purchase order.
Key clauses explained
- Description and quantity – be specific: model numbers, sizes, colours, condition (new or used) and any specifications.
- Price and payment – total price, whether tax and delivery are included, and when it is paid. A deposit protects the seller on custom orders.
- Delivery – date, place and who arranges transport.
- Inspection and acceptance – how long the buyer has to check the goods and reject faulty items.
- Title and risk – this template keeps ownership with the seller until paid in full, while risk passes to the buyer on delivery.
- Warranty or "as is" – choose a defects warranty or sell the goods "as is".
- Returns – whether change-of-mind returns are accepted and on what terms.
Warranty or "as is"?
New goods are usually sold with a warranty against defects for a period. Used goods, clearance stock and items sold for parts are often sold "as is". Be aware that in many countries consumers have statutory rights that a seller cannot exclude, so an "as is" clause may not be effective in a sale to a consumer. It is more commonly relied on in sales between businesses.
How to use this template
- Enter the seller's and buyer's legal names and addresses.
- Describe the goods and quantity, and enter the total price (state whether tax and delivery are included).
- Choose payment terms, and enter the delivery date, place and method.
- Pick the inspection period, warranty and returns policy, and switch on optional clauses such as partial deliveries.
- Download the PDF and have both parties sign it. Then issue an invoice, send a delivery note with the goods and give a receipt for each payment.
Common mistakes
- Vague descriptions. "Chairs" invites disputes; "50 oak chairs, model DC-200, natural finish" does not.
- Not saying who pays delivery and tax. State it in the price.
- Handing over goods before payment without a retention-of-title clause.
- Ignoring margins. Check your price covers costs with the markup calculator.
This template is general information, not legal advice. Sale of goods and consumer protection laws vary by state and country; ask a lawyer for high-value, international or regulated sales.
Frequently asked questions
What is the difference between a sales agreement and a bill of sale?
A sales agreement sets the terms of a sale – price, payment, delivery and warranties – usually before the goods are handed over. A bill of sale is a simpler document that records the transfer of ownership of a specific item, typically a used car or piece of equipment.
When does ownership of the goods pass to the buyer?
Under this template, ownership passes when the seller receives full payment, while risk of loss passes on delivery. Without a written agreement, default legal rules decide this, and they may not be what you expect.
Can I sell goods "as is"?
Often yes, especially for used goods and in sales between businesses. However, in many countries consumers have statutory rights that cannot be excluded, so an "as is" clause may not fully apply to sales to consumers.
Do I need a written contract to sell goods?
Many small sales are made without one, but a written agreement avoids disputes about price, delivery and quality. In some jurisdictions, sales of goods above a certain value need written evidence to be enforceable.
Can the buyer reject faulty goods?
Yes. The buyer can notify the seller in writing within the inspection period, and the seller will repair, replace or refund. Goods are treated as accepted if no notice is given, except for hidden defects.
