What is an Agreement of Sale?
Sometimes referred to as a purchase agreement or contract of purchase, an agreement of sale is essentially a document that details the terms and conditions related to the sale and purchase of goods or services. The existence of the agreement of sale is evidence that the buyer and the seller are both in agreement on the terms of the transaction. In most instances, the agreement of sale is viewed as a binding contract. In other situations, the document is viewed as more of a promise to purchase than an actual commitment on the part of the buyer.
The standard agreement of sale includes the basic information required to move toward the final purchase. This includes the names of both the buyer and the seller, along with contact information for each. Included in the body of the document are the terms and conditions as they relate to the sale, including the purchase price, the terms of delivery, and any conditions that either party may invoke to halt the purchase. The text will also feature a more or less complete description of the goods or services that the seller will render to the buyer. Other elements are included in the body of the agreement of sale, based on requirements set in place by local jurisdictions.
Not all businesses make use of an agreement of sale. However, there are examples of the document found in many different industries. Telecommunications services often make use of this type of document when establishing a business arrangement with a new client. Real estate is another example of an business type that will often make use of this type of sales agreement. Even utility providers in some nations around the world routinely use an agreement of sale as part of the purchase process.
Before actually signing any agreement of sales document, it is a good idea to understand how the document is perceived in the local jurisdiction. While there are areas of the world where an agreement of sale is considered a precursor to the actual sales contract, that is not always the case. Depending on local regulations, the agreement of sales contract may be fully binding and require that both parties comply fully with the terms and conditions outlined in the body of the document. Understanding exactly how the document is viewed in the local setting will make it easier to choose a course of action if some circumstance not covered in the body of the agreement should arise.
Written by Malcolm Tatum
