- Warranty clauses
- Delivery & risk of loss
- Return policy
- Force majeure
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What is a sales agreement?
A sales agreement — also called a sales contract or purchase and sale agreement — is a legally binding document between a buyer and seller that defines every important aspect of a commercial transaction. While a simple purchase order covers what is being bought and at what price, a sales agreement goes further: it addresses delivery terms, who bears the risk if goods are damaged in transit, what warranties the seller makes, what happens if the buyer wants to return the goods, and how disputes will be resolved.
Sales agreements are used in both business-to-business (B2B) and business-to-consumer (B2C) transactions. In B2B contexts, they are particularly important for large or custom orders, long-term supply relationships, and cross-state or international transactions where the terms of the deal need to be documented unambiguously. In B2C contexts, a sales agreement — sometimes embedded in terms and conditions — sets the return policy, warranty terms, and payment requirements that govern every sale.
In the United States, the sale of goods is governed by Article 2 of the Uniform Commercial Code (UCC), which has been adopted in some form by every state. The UCC fills gaps in sales agreements with default rules — for example, if your agreement does not specify a delivery timeline, the UCC implies delivery within a "reasonable time." This means a written sales agreement that addresses the key terms is always preferable to relying on default rules that may not match what you intended.
A well-drafted sales agreement also reduces transaction costs. When both parties have agreed in writing to the exact product specifications, price, payment schedule, and delivery terms, there is nothing to argue about after the fact. Disputes that do arise are resolved faster and cheaper when the governing document is clear. The upfront investment in a written agreement pays dividends every time a question comes up about what was actually agreed.
Key clauses in a sales agreement
Each clause in a sales agreement addresses a specific risk. Here is what every sales contract needs — and the industry-specific examples that show how each clause works in practice.
How to use a sales agreement effectively
Writing a solid sales agreement is only half the work. Here is how to make it work in practice — from first draft to fulfilled delivery.
- Attach a detailed specification sheet — For physical goods, never rely solely on a verbal description in the contract. Attach a specification sheet, product datasheet, or technical drawings as an exhibit. If a dispute arises about whether the delivered goods matched what was ordered, the specification sheet is your primary evidence.
- Choose FOB terms deliberately — The FOB (Free on Board) designation determines who bears the risk of loss during transit and who pays shipping. FOB Origin means risk transfers when the seller delivers goods to the carrier — the buyer bears transit risk. FOB Destination means risk transfers when goods arrive — the seller bears transit risk. For high-value goods, sellers usually prefer FOB Origin; buyers usually prefer FOB Destination.
- Be explicit about custom orders — Custom-manufactured goods create unique risks for sellers: once production begins, the goods have little value to anyone but the intended buyer. Include language that makes the deposit non-refundable once manufacturing begins, and define what constitutes "custom" clearly. Many sellers also require full payment upfront for custom orders.
- Document the inspection process — Set a short, specific inspection window (3–7 business days) and require written notice of rejection. Silence should be deemed acceptance. This prevents buyers from raising quality complaints months after delivery — a common tactic in payment disputes. Your invoice should remind buyers of the inspection window at the time of delivery.
- Handle payment terms in the agreement, not just the invoice — Payment terms stated only on an invoice are often unenforceable if the buyer disputes them, because the invoice is issued after the contract is formed. State your payment terms — net-30, net-60, late payment interest, early payment discounts — in the sales agreement itself. Your invoice then references those terms, and the buyer cannot claim they were unaware.
Legal context
- $500+ value requires written contract under UCC Article 2
- 49 states have adopted UCC as the framework for goods sales
- 5 days typical inspection window before deemed acceptance
Works for
Manufacturing, Wholesale distribution, Retail B2B, Equipment sales, Software licensing, Professional services, Custom fabrication, Food & beverage, Construction materials, Technology products.