Draft a Professional Sales Agreement Step-by-Step

Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom.
Also note: This is not legal advice.

Introduction

Sales agreements are necessary documents that protect both buyers and sellers from unforeseen issues, potential losses, and legal disputes. It is important for businesses and investors to understand the need for sales agreements and how they can provide the much-needed legal safeguards.
A sales agreement is a legally binding contract that outlines the terms of a sale, including the purchase price, payment terms, delivery conditions, warranties, etc. It clarifies expectations between both parties so as to avoid confusion or misunderstandings. Besides ensuring clarity on all details of the transaction, it also provides legal protection on rights and obligations of each party as well as any liabilities associated with it.
In addition to avoiding unexpected problems down the line, it can help in quickly resolving any future disputes since all parties know exactly what has been agreed upon.
For these reasons outlined above, drafted sales agreement should not be taken lightly which is why one should consider seeking help from experts like Genie AI’s open source legal template library when drawing up their documentations. Genie AI’s template library helps anyone draft and customize high quality documents without having to consult a lawyer or pay hefty fees while their millions of data points teach its Artificial Intelligence (AI) what a market-standard agreement looks like - making sure everyone understands their role within it clearly before signing off on it!
So don’t wait - read on below for our step-by-step guidance on how to draft professional sales agreement today and access our free template library!

Definitions (feel free to skip)

Parties: Individuals or entities involved in a contract.
Goods or Services: Items or tasks being sold.
Terms: Details of a contract, such as payment, delivery, and warranties.
Rights and Obligations: The responsibilities and entitlements of each party in a contract.
Dispute Resolution: Process for resolving disagreements between parties in a contract.
Amendments/Termination: Modifications or end of a contract.
Intellectual Property Rights: Rights to creations of the mind, such as inventions, designs, or artistic works.
Confidentiality: Keeping of private information secret.
Applicable Laws: Laws that govern a contract.
Offer and Acceptance: An offer made by one party, and accepted by another.
Consideration: Exchange of something of value in a contract.
Mutual Assent: Both parties agreeing to the terms of a contract.

Contents

• Explain the basic elements of a sales agreement
• Parties
• Goods or services
• Terms
• Rights and obligations
• Dispute resolution
• Amendments/termination
• Intellectual property rights
• Confidentiality
• Applicable laws
• Outline the legal requirements for a sales agreement, such as the requirements for valid offer and acceptance.
• Describe the parties involved in the agreement and the type of goods or services being sold
• Identify the seller and buyer
• Describe the type of goods or services
• Include any other necessary details
• Specify the terms of the sale, including the price, payment method, delivery details, and any warranties or guarantees.
• Set out the rights and obligations of each party
• Identify who is responsible for delivery
• Indicate who will bear any costs
• Set out the conditions for refunds or exchanges
• Include a provision for dispute resolution
• Describe the process for resolving any issues
• Outline the procedures for making a claim
• Explain the procedure for amending or terminating the agreement.
• Include statements regarding intellectual property rights, confidentiality, and applicable laws
• Define the scope of confidentiality
• Explain the ownership of intellectual property
• Identify the applicable laws
• Provide an example of a completed sales agreement.
• Explain the importance of getting the agreement reviewed by a lawyer or other qualified professional
• Describe the benefits of having a professional review the agreement
• List potential risks of not having the agreement reviewed by a professional

Get started

Explain the basic elements of a sales agreement

• Understand the legal implications of the agreement: Make sure you have a clear understanding of the state and national laws that will apply to the contract.
• Identify the parties: Determine who will be involved in the agreement, including the buyer and seller, and include contact information for each.
• Define the goods or services being sold: Include a clear description of the goods or services that are being sold.
• Note the payment terms: Set out what payment will be due, when it will be due, and how it will be made.
• Establish the delivery terms: Clearly state when the goods or services will be delivered.
• Include any additional terms: If there are any other terms that need to be included, make sure to include them in the agreement.
• Signatures: Make sure that all parties have signed the agreement and dated it appropriately.

You’ll know when you can check this off your list and move on to the next step when you have a complete understanding of the basic elements of a sales agreement and have included them in your draft.

Parties

• Determine who the parties in the agreement are.
• List the full legal names of the buyer and seller.
• Include their respective addresses and contact information.
• Ensure that the buyer and seller are legally capable of entering into a contract.
• Review any applicable state laws.
• Confirm that each party has the legal authority to enter into the contract.
• Once all the required information is included, you can move on to the next step.

Goods or services

• Identify the goods or services being provided in the agreement
• Describe the goods or services in detail and specify the quantity of goods being sold
• Outline any conditions that the seller is placing on the fulfillment of the goods or services
• Include any warranties, guarantees, or other related promises that the seller is making with the sale
• When complete, review the goods or services section of the sales agreement to ensure accuracy
• Once the accuracy of the goods or services section has been verified, proceed to the next step: Terms

Terms

• Define the specific terms of the agreement, such as start and end dates, payment terms, and any other conditions of the sale.
• Make sure to include a clause that states that all terms must be met in order to complete the sale.
• If the agreement involves a service, include a clause that outlines the details of the services being provided and the timeframe for completing them.
• Include a clause that outlines the consequences for breach of the agreement, such as late fees or loss of rights.
• When you have included all required terms, review the agreement to make sure all parties understand and agree to the terms.
• Once both parties are satisfied, you can move on to the next step.

Rights and obligations

• Research applicable laws and regulations that govern the agreement
• Draft the rights and obligations of both parties, including delivery of goods and services, payment, and confidentiality
• Include any additional provisions that may be necessary, such as warranties and limitations of liability
• Have both parties review and agree to the rights and obligations
• When both parties have agreed to the rights and obligations, the next step can be to move onto the dispute resolution section.

Dispute resolution

• Understand what the dispute resolution process might entail - is it arbitration, court proceedings, or something else?
• Write a clause into the agreement specifying how disputes will be resolved - this should include the process, timeframe, and any other relevant details.
• Make sure both parties agree to the dispute resolution clause and that it is signed off by both parties.
• Once the dispute resolution clause is agreed upon and signed off, you can check this step off your list and move on to the next step.

Amendments/termination

• Understand the types of amendments that may need to be made to the agreement, such as modifications to delivery timelines, payment terms, or changes to the scope of the project
• Consider any termination clauses that may need to be included, such as the right to terminate the agreement if one party does not fulfill their obligations or if the project is no longer feasible or desirable for either party
• Determine the terms for any early termination and the potential consequences for either party, such as the repayment of funds or the forfeiture of rights
• Draft the language for the amendments/termination clauses and include them in the agreement
• Upon completion, both parties should review and sign the agreement to make the amendments/termination clauses legally binding
• Once both parties have signed the agreement, you can check this off your list and move on to the next step in drafting a professional sales agreement.

Intellectual property rights

• Determine which intellectual property rights are relevant to the agreement (e.g. copyright, trademarks, patents and other forms of intellectual property)
• Establish who owns the rights to the intellectual property and how it is to be used
• Include a clause that defines the obligations of each party in relation to the intellectual property rights and how any disputes over the rights will be resolved
• Include a clause that the buyer will not use the intellectual property in any way that could damage the seller’s reputation or infringe upon any other parties’ intellectual property rights
• Ensure that the agreement specifies that all intellectual property rights remain the property of the seller and that the buyer is only granted a limited right to use the intellectual property
• When complete, ensure that both parties sign the agreement to signify agreement to the intellectual property rights as outlined

How you’ll know when you can check this off your list and move on to the next step: You will have completed the Intellectual Property Rights step of the Sales Agreement when all of the above points have been addressed and the agreement has been signed by both parties. Once this is done, you can move on to the next step, which is the Confidentiality Clause.

Confidentiality

• Understand the legal implications of having confidential information shared between parties
• Determine what information should be included in the agreement regarding confidential information
• Agree upon language that will make it clear to both parties that any confidential information shared is not to be used for any purpose other than that agreed upon
• Specify that all confidential information is to remain strictly confidential and not be shared with any third party
• Include any other restrictions that need to be placed on confidential information

Once both parties have agreed upon the language for confidentiality, you can check this off your list and move on to the next step.

Applicable laws

• Research and understand the applicable laws that pertain to your sales agreement in the jurisdiction where you are operating
• Determine if there are any industry or government regulations that you must follow
• Make sure that you are aware of any taxes, fees, or licenses that must be paid
• Consider incorporating any applicable laws into the agreement itself
• Take into account any applicable laws when negotiating the terms of the agreement
• Once you have researched and taken into account the applicable laws, you can proceed to the next step in drafting your sales agreement.

Outline the legal requirements for a sales agreement, such as the requirements for valid offer and acceptance.

• Familiarize yourself with the applicable laws for a sales agreement, such as the Uniform Commercial Code.
• Determine if the offer and acceptance of the agreement is legally binding by verifying certain elements are present, such as offer, acceptance, consideration, and capacity.
• Ensure the consideration is something of value, such as cash, goods, services, or a promise to do or not do something.
• Identify any legal restrictions or requirements, such as age, mental capacity, or specific statutes, that may affect the agreement.
• When these requirements are met, check this step off your list and move on to the next step.

Describe the parties involved in the agreement and the type of goods or services being sold

• Gather basic contact information for both the buyer and seller, including name, address, and contact information
• Identify the goods or services that are being sold
• State the quantity and price of the goods or services to be sold
• Describe any details about the goods or services, such as size, color, etc.
• Include any special terms or conditions related to the sale of the goods or services

You can check this off your list when you have collected all of the necessary information related to the parties involved in the agreement and the type of goods or services being sold.

Identify the seller and buyer

• Gather the contact information for the seller and the buyer
• Get the full name and address of each party
• For businesses, obtain the registered business name and address
• Make sure you have reliable contact information for each party (phone number, email address)
• Once you have all of the necessary contact information, you know you can move on to the next step.

Describe the type of goods or services

• Take the time to clearly define the goods or services that are being sold in the agreement
• This can include items such as quantity, type, quality, and any other specifications necessary
• Make sure to be as detailed as possible to avoid any potential misunderstandings
• Once you have included all the necessary details, you are ready to move on to the next step.

Include any other necessary details

• Gather any additional information required to complete the contract, such as the names, addresses, and contact details of both parties
• Research local laws to ensure the agreement is legally enforceable in the jurisdiction where the contract will be executed
• Make sure the agreement includes any other details that may be relevant to the transaction, such as applicable taxes, shipping and delivery terms, restrictions and exclusions, return policies, etc.
• Once all the details have been included, review the agreement to make sure all the necessary information is present and all the parties understand the terms
• Have both parties sign and date the agreement to make it legally binding

Specify the terms of the sale, including the price, payment method, delivery details, and any warranties or guarantees.

• Set the purchase price, taking into account any applicable taxes and discounts.
• Specify payment terms: when payment is due, when it must be received, and the payment method (cash, check, credit card, etc.).
• Detail when and how goods or services will be delivered.
• Include any applicable warranties or guarantees, and any limits or exclusions on them.
• Specify any return and refund policies.

When you have included all the necessary details related to the sale, you can check this step off your list and move on to setting out the rights and obligations of each party.

Set out the rights and obligations of each party

• Outline what each party is responsible for in the agreement
• Specify the roles and responsibilities of each party
• Describe how each party should behave during the agreement
• List any restrictions on how each party can act
• Include any applicable laws that must be followed
• Describe the consequences for violation of the agreement
• List any documents that must be signed or exchanged
• Outline any additional conditions or requirements

When you have outlined all the rights and obligations of each party in the agreement, you can check this step off your list and move on to the next step.

Identify who is responsible for delivery

• Decide on the party responsible for delivering the goods or services, and state their name in the agreement
• Specify the exact address or location of where the delivery will take place
• Make sure that the delivery address is as accurate as possible and is suitable for the goods or services to be delivered
• Specify the exact date for when the delivery must take place
• Outline any additional conditions that must be met for the delivery to occur

When you have completed this step, you can check it off your list and move on to the next step.

Indicate who will bear any costs

• Research the legal requirements for who is responsible for any associated costs, like shipping and handling fees
• Make sure the costs for the buyer and seller are clearly stated in the agreement
• Take into account any taxes, duties, or other fees that may be associated with the purchase
• When the costs are clearly identified and agreed upon, you can mark this step as complete and move on to the next step.

Set out the conditions for refunds or exchanges

• Decide what type of refund/exchange policy you want to offer
• Clearly outline when refunds or exchanges will be provided
• State the conditions under which a refund or exchange will be given
• Outline any fees or penalties that may be incurred
• Provide a timeframe in which a refund or exchange must be requested
• Make sure the policy is compliant with applicable laws
• Specify how the refund or exchange will be given (cash, store credit, etc.)
• Include a clause that requires the customer to return any items before a refund or exchange is issued

Once you have outlined the conditions for refunds or exchanges in the sales agreement, you can check this off your list and move on to the next step.

Include a provision for dispute resolution

• Determine how disputes between the parties will be handled.
• Consider including a clause that any dispute must be resolved through a process such as mediation or arbitration.
• Make sure to include a clause that states that the prevailing party in any dispute or litigation shall be entitled to recover their reasonable attorney’s fees and costs.
• You can check this off your list once the dispute resolution clause has been included in the agreement.

Describe the process for resolving any issues

• Clearly define the process for resolving disputes, such as binding arbitration or mediation.
• Outline the procedures for initiating a dispute resolution, such as a written notice of dispute to the other party.
• Specify the venue and timeline for resolving the dispute.
• Include language that encourages the parties to attempt to resolve the dispute before taking it to additional levels of binding arbitration or court.
• Include language that requires the parties to use their best efforts to work together to resolve the dispute.
• Include language that requires the parties to keep confidential any confidential information shared during dispute resolution.

Once you have completed this step and all the provisions for dispute resolution are included in the sales agreement, you can move on to the next step.

Outline the procedures for making a claim

• Make sure you have a clear, agreed-upon procedure for making claims in your sales agreement.
• Spell out the exact steps that need to be taken for a claim to be filed, such as the timeline for filing the claim, who is responsible for filing it, and who should be contacted if there is a problem.
• Include any documentation that needs to be provided, such as proof of purchase, and details on how to submit the claim.
• Set out who will be responsible for reviewing and responding to the claim.
• Describe the process for how the claim will be investigated and the steps that will be taken to resolve the issue.
• Provide the contact information of the person or department responsible for handling the claim.

You will know you have completed this step when you have a clearly outlined procedure for making claims in your sales agreement.

Explain the procedure for amending or terminating the agreement.

• State that either party may amend or terminate the agreement at any time, provided that the other party is notified in writing.
• Specify what needs to be included in the written notice of termination or amendment.
• Provide an explanation of how disputes will be handled in the event of a disagreement over amending or terminating the agreement.
• Include a statement that any amendments or termination of the agreement must be in writing and signed by both parties.
• Specify the time frames for any amendment or termination of the agreement.

Once you have included all of the above points, you can check this step off your list and move on to the next step.

Include statements regarding intellectual property rights, confidentiality, and applicable laws

• Research the applicable laws that apply to the agreement in the location where it will be enforced
• Consult a lawyer to ensure that all applicable laws are included in the agreement
• Include a clause that states that all intellectual property rights are owned by the seller
• Include a confidentiality clause that outlines the duties and obligations of both parties to keep the agreement confidential
• Specify the remedies that will be taken in case of a breach of confidentiality
• Include a clause that defines what constitutes a breach of the agreement
• Include a clause that outlines the consequences of breaching the agreement
• When you have included all applicable laws and the clauses mentioned above, you can check this step off your list and move on to the next step.

Define the scope of confidentiality

• Determine what information should remain confidential between the parties involved in the agreement
• Outline the details of what information should remain confidential, such as business plans, customer data, or trade secrets
• Note any exceptions to the confidentiality provisions
• Include a clause that requires the parties to keep confidential information confidential even after the agreement ends
• Specify the timeframe for which the confidential information must remain confidential
• Confirm that the parties cannot disclose any confidential information to any third parties
• Verify that the agreement includes non-disclosure provisions for future agreements between the parties
• When completed, the scope of confidentiality should be clearly outlined in the sales agreement
• Once the scope of confidentiality is defined, you can move on to the next step of explaining the ownership of intellectual property.

Explain the ownership of intellectual property

• Review the scope of the services and identify any intellectual property that may be involved in the work
• Specify who owns the intellectual property that’s created as part of the services
• Consider whether any additional licenses or permissions are needed to use the intellectual property
• Note any limitations on the use of the intellectual property
• Determine whether any third-party intellectual property is involved and document the conditions of use
• When finished, make sure all intellectual property ownership is clearly defined in the sales agreement

You’ll know you’re finished with this step when you have a clear understanding of the ownership of all intellectual property included in the agreement and have documented it in the sales agreement.

Identify the applicable laws

• Research the applicable laws to your sales agreement, such as local, state, and federal laws.
• Check to see if there are any industry-specific regulations or laws that could apply to your agreement.
• Make sure you understand the laws and regulations and how they may apply to the sales agreement.
• When you have a clear understanding of the applicable laws, you are ready to move on to the next step.

Provide an example of a completed sales agreement.

• Research completed sales agreements to get an overview of the entire agreement, including the sections and language used.
• Look at sample contracts from professional organizations and government websites, such as the Small Business Administration’s template.
• Visit websites such as LegalZoom and Rocket Lawyer that provide free templates and examples of sales agreements.
• Use the information gathered to create your own sales agreement.
• When you complete the agreement, make sure to keep a copy for your records.

You will know that you can move on to the next step when you have a completed sales agreement that you are satisfied with.

Explain the importance of getting the agreement reviewed by a lawyer or other qualified professional

• Understand that the agreement should be reviewed by a qualified professional to ensure that the legal interests of all parties involved are protected
• Discuss the agreement with the qualified professional to identify any potential issues and risks, and to ensure that the document is legally binding
• Understand that the qualified professional can provide advice and guidance on the terms of the agreement and help to interpret the legal implications of any clauses
• Recognize that having a qualified professional review the agreement can be beneficial and could save time and money in the long run
• Identify any potential legal issues that could arise and create a plan to address them

When you can check this off your list and move on to the next step:

• When you have discussed the agreement with a qualified professional and have a clear understanding of the legal implications of any clauses in the document

Describe the benefits of having a professional review the agreement

• A professional review of the agreement can ensure that any contractual obligations are legally sound and binding
• A professional can identify any conflicts between the parties’ interests or any potential legal issues that may arise
• A professional can provide feedback on any language that could be interpreted differently by the parties
• A professional can provide guidance on how to negotiate any potential disputes
• A professional can provide advice on what other contractual clauses or terms need to be included in the agreement

Once you have described the benefits of having a professional review the agreement, you can move on to the next step.

List potential risks of not having the agreement reviewed by a professional

• Not having an agreement reviewed by a professional can leave the parties open to risks such as legal loopholes, unclear or contested clauses, and unexpected liabilities
• Not recognizing or addressing potential legal issues can put the parties at a disadvantage if a dispute arises
• A professional can identify and address potential risks before the agreement is signed, reducing the chances of costly disputes in the future
• Professional reviews can also provide advice on how to best structure the agreement to maximize the benefits for the parties involved
• Once you have a clear understanding of the potential risks of not having the agreement reviewed by a professional, you can move on to the next step.

FAQ:

Q: What is the difference between a Sales Agreement and a Contract?

Asked by Nick on April 8th, 2022.

A: A Sales Agreement and a Contract are both legally binding documents, but they have some distinct differences. A Sales Agreement is specific to the sale of goods or services, while a Contract is broader in scope and can cover many different obligations or rights. The key difference between a Sales Agreement and a Contract is that the Sales Agreement covers only the sale of goods or services, whereas the Contract covers obligations or rights that are not necessarily related to the sale of goods or services.

Example dispute

Raising a Lawsuit with a Sales Agreement

• The plaintiff must be able to demonstrate that they were a party to the sales agreement in question.
• The plaintiff should be able to provide evidence of the terms of the agreement, such as a copy of the signed contract.
• The plaintiff must be able to demonstrate that the other party has breached the terms of the agreement in some way.
• The plaintiff should be able to provide evidence of the breach, such as emails, text messages, or other documentation.
• The plaintiff may be able to claim damages for any losses incurred as a result of the breach, such as missed payments or other costs.
• The plaintiff may be able to seek an injunction to prevent the other party from continuing to breach the agreement.
• The plaintiff may be able to seek other remedies, such as specific performance or rescission of the agreement.
• The plaintiff may be able to seek legal fees and costs associated with the lawsuit.

Templates available (free to use)

Consignment Sales Agreement
Land Sales Agreement
Manufacturing And Sales Agreement
Retail Sales Agreement
Sales Agreement Form
Software Sales Agreement

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