What is a Sales Contract?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 23 September 2019
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A sales contract is a legal agreement between a buyer and seller involved in a transaction. Sales contracts can vary in nature, from very brief boilerplate forms to complex sales agreements that can span multiple pages to cover every term and condition of sale. Basic sales contracts can be found pre-printed in self-help law books and online. For special circumstances, a lawyer may be needed to draw up the contract.

The sales contract describes the product or service being purchased, names the buyer and seller, and provides information about the cost, delivery estimate, and other matters related to the sale. In addition, the sales contract covers terms and conditions of sale that may come into play as the transaction occurs. Sales contracts provide legal protection to both buyers and sellers.

Legal agreements are usually strongly advised for transactions that are high value or complex in nature. They ensure that in the event there is a problem with the sale, there are already procedures in place for dealing with the problem. This includes everything from a seller getting cold feet and deciding not to sell, to a buyer paying with a bad check. In the event that the buyer and seller end up in a dispute and go to court over the transaction, the sales contract is one of the key pieces of evidence that will be involved.


From the perspective of the seller, the sales contract commits the buyer to the purchase and establishes consequences for reneging on the deal. Buyers have protections in the form of a delivery guarantee that clearly states what is being sold and how it will be delivered to the buyer. If the seller decides to terminate the deal, the sales contract usually includes a clause providing compensation to the buyer. This is designed to act both as an incentive to keep both parties committed, and as a compensation in the event that there is a problem with the sale.

When a transaction involves a sales contract, both parties should read the contract carefully and become familiar with it. If there are questions, it is advisable to ask them before signing. Likewise, if someone wants to renegotiate the terms and conditions, this should be discussed before the contract is signed and the parties embark on the transaction. Correcting or changing the contract before the sale is a straightforward task, but once it is signed and accepted by both parties, it cannot be altered.


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