What is an Agreement of Sale?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 03 February 2020
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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. One is evidence that the buyer and the seller are both in agreement on the terms of the transaction. In most instances, the agreement is viewed as a binding contract, while in others, it 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, based on requirements set in place by local jurisdictions.


Not all businesses make use of this type of document, but there are examples found in many different industries. Telecommunications services often make use of them when establishing a business arrangement with a new client, and they are often part of a real estate agreement. Even utility providers in some nations around the world routinely use them as part of the purchase process.

Before actually signing any agreement of sales document, it is a good idea for both parties to understand how the document is perceived in the local jurisdiction. While there are areas of the world where one is considered a precursor to the actual sales contract, that is not always the case. Depending on local regulations, the 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.


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Post 4

If you want to sell a car, all information must be in detail, like the type of car, make, color and model.

Post 3

If I wanted to sell something like a car, how would I know what needed to be put into the agreement of sale? I know you would have to include things like the price, mileage, condition, etc., but what else? Are there agreement of sale templates that you can find for when you are selling different items?

Also, does there ever come a point when you really need to have a lawyer take a look at an agreement of sale? I'm sure selling a house on your own would probably warrant having a lawyer look at the contract, but is there anything else?

Post 2

@cafe41 - Interesting point. I never realized there was any sort of period where you could cancel the contract. Obviously, I've never had to sign a contract like this, but I wonder if it is legal to put a clause in saying that if the person withdraws their agreement, they have to pay a certain fee.

How do you know what the rules are for your area? Since the article mentions that sometimes the agreement of sale is just a precursor to the actual sales contract, how would you be able to find out the local laws?

Post 1

I know that a lot of legal agreements in which there is a formal sale like with the purchase of a car, allow you three full days to change your mind on the purchase. I think that this is a good idea because buying something like a car should never be made on impulse and you should have time to think about it even after you signed on the dotted line.

Sometimes I think that people are pressured by pushy sales people to buy something, and then they get home and fully regret it. I think that this three day period was created to combat scenarios like this from happening.

The problem is that this rule does not apply to used cars which means that you really have to be careful when you are buying a used car.

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