Sales Agreements: Here's What You Need to Know
What is a sales agreement?
A sales agreement is a contract between a buyer and a seller that details the terms of an exchange. It is also known as a sales agreement contract, sale of goods agreement, sales agreement form, purchase agreement, or sales contract.
One very common type of sales agreement is the type used when purchasing a home. Though these purchase agreements tend to be quite long, they clearly state the terms of sale and the conditions necessary for the sale to be completed.
The purpose of a sales agreement
The purpose of a sales agreement is to act as a legally binding contract between two parties involved in an exchange of money for goods, services, and/or property. One party is a buyer, while the other is a seller. Both the buyer and seller may be individuals or organizations.
A sale of goods agreement, for example, may be used to sell vehicles or electronic devices. If the electronic devices come with related services such as installation, the sales agreement contract would also include these services.
When do I need a sales agreement?
A sales agreement contract is a good idea any time you buy or sell something that requires more than simply transferring ownership. Imagine the confusion that could result from lack of clarity on the terms of a house or new vehicle sale. Details such as down payment, closing costs, insurance companies, titles, financing, and more need to be understood by all parties.
Another situation that warrants a sales contract is any time goods, services, or property will be provided or transferred at a later date. The sales agreement form holds all parties responsible for ensuring the sale goes through as planned. It also provides recourse in the case that the sale falls through.
Finally, it’s wise to use a purchase agreement when you plan to transfer liability for goods, services, or property to a new party.
Types of sales agreements
There are as many types of sales agreements as there are goods, services, and properties to sell. Some common ones include:
- Real estate sales agreements for homes, multifamily housing properties, or commercial real estate
- Vehicle sales agreements for automobiles, especially new cars
- As-is sales agreements which strictly state that no improvements, repairs, or updates will be made to an item being sold (such as real estate property or a vehicle)
- Materials sales agreements for companies making large purchases for their supply chain
- Recurring sales agreements for an ongoing supply of materials or services paid on a schedule
- Share sales agreements for buying and selling a companies’ shares
- Assets sales agreements for when one business is acquiring another
Elements of a sales agreement
There are a number of important things to include in a sales contract. A strong purchase agreement will include:
- Buyer and seller names and contact information
- Description of goods, services, or property being purchased
- Payment amount, dates, and method
- Liability of each party in the case of loss, damage, or delivery failure
- Ownership information, such as when ownership formally transfers to the buyer
- Notices, or clarification of how the parties will communicate regarding the transaction
- Dispute resolution outlining how to resolve disagreements
- Delivery details (if applicable)
Depending on what is being sold, other elements of a sales agreement may include rights assignment, deposit, governing law for interstate or cross-border sales, inspection, nondisclosure agreement, severability, and warranty.
Limitations of sales agreements
Sales contracts are excellent tools for ensuring important transactions go smoothly. However, they are not completely foolproof.
For example, if a company’s sales reps start issuing sales agreements without full approval, they can quickly create a liability issue. This can happen when approval processes are confusing or too bogged down for reps to make timely sales.
When full approval takes too long, strong leads slip through the cracks, costing your business valuable revenue. Converting leads to sales requires a streamlined sales contract process that allows reps to quickly and seamlessly request and obtain approval to close deals.
Creating a sales agreement
To write an enforceable sales agreement, you’ll want to start by making sure you have all of the basic elements listed earlier in this article. Depending on what you’re buying or selling, you may need to add details about governing law, rights, warranty, deposit, or other important information.
Creating a sales agreement doesn’t have to be overwhelming or complicated. Whether you’re a one-time buyer or seller making sure a big purchase goes right, or a merchant looking for a basic sales agreement form to use in sales, tools exist to help.
You can get started preparing a sales contract agreement by searching for examples online or using contract management software to create, manage, and streamline the approval process for your purchase agreements.
Managing sales agreements
In addition to creating sales agreement forms that cover all aspects of a transaction, it’s important to track these sales contracts through their entire lifecycle. This means that sales agreement origination, approval, and execution need to be managed within one cohesive system or risk being bogged down by process bottlenecks.
By creating your own workflows for sales agreement creation and execution, your organization can streamline the sales contract approval process while ensuring contracts are as detailed as necessary. Contract lifecycle management software makes this possible while also taking care of long-term reporting, ensuring that service sales agreements and ongoing sales contracts meet their benchmarks.
Legal and sales collaboration
Traditionally, legal and sales haven’t had the greatest relationship in fast-paced businesses. Legal wants to ensure that the organization adheres to necessary laws, rules, and regulations. Meanwhile, sales wants to move fast to close deals while they have the attention of their leads.
This results in friction if the two departments can’t learn to work together. Fortunately, contract software like Ironclad is designed to bring legal and sales together and accelerate deals by 85%.
Contract software uses automation to streamline how organizations handle complex situations, such as when the Texas Rangers had to amend hundreds of agreements due to COVID-19. It can even help with sales compliance in large acquisitions, such as AppDynamic’s 100% compliance in its acquisition by Cisco.
Streamlining the sales agreement process
Managing a high volume of sales agreements doesn’t have to create a disorganized mess. If you’re closing sales every week and need a system to help keep track of multiple contracts, there are tools available to help.
With contract lifecycle management software like Ironclad, legal and sales can work together to reduce the amount of time spent waiting on approvals. What’s more, you can use the data from your sales agreements to make better-informed decisions for your organization’s future.
Ironclad’s digital contract management tool helps in many ways. For example, Workflow Designer helps you customize your unique contract process, which companies like Thumbtack have used to scale sales teams and close deals faster. The platform also boasts Salesforce integration and detailed reporting, with an easy-to-use data repository to help inform decision-making.
Thanks to its many useful features and ease of use, Ironclad is trusted by brands like Asana, Canva, Fitbit, Dropbox, MasterCard, and more.
Manage your volume of sales agreements with ease using Ironclad. Sign up for a consultation here to be one step closer to streamlining your sales agreement process.
- What is a sales agreement?
- The purpose of a sales agreement
- When do I need a sales agreement?
- Types of sales agreements
- Elements of a sales agreement
- Limitations of sales agreements
- Creating a sales agreement
- Managing sales agreements
- Legal and sales collaboration
- Streamlining the sales agreement process
- Next steps
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Ironclad is not a law firm, and this post does not constitute or contain legal advice. To evaluate the accuracy, sufficiency, or reliability of the ideas and guidance reflected here, or the applicability of these materials to your business, you should consult with a licensed attorney. Use of and access to any of the resources contained within Ironclad’s site do not create an attorney-client relationship between the user and Ironclad.