A sales contract (also called a sales agreement) is a written agreement that sets the terms of a sale between a buyer and a seller, including the goods, the price, payment and delivery. A written agreement gives both sides a record to point to if the other side changes the deal at the last moment. Keep reading to learn what to include, or use the free sales contract template below. If a seller earns a commission on each sale instead, see the Sales Commission Agreement.
Build Your Document
Answer a few simple questions to make your document in minutes
Save and Print
Save progress and finish on any device, download and print anytime
Sign and Use
Your valid, lawyer-approved document is ready
A sales contract or a sale of goods contract is a legal document that delineates the relationship between buyers and sellers of certain goods or services. Its function is not like that of the bill of sale, even though the two are quite similar. While a bill of sale simply signifies the transfer of ownership between the two parties, a sales agreement, in many cases, predates the bill of sale and formalizes the agreement to buy and sell a certain amount of goods.
A sales contract also describes all the details of the transaction. Typically it covers:
Not all purchases call for an agreement between the seller and the buyer. You only need those for either large purchases like a car or real estate, and for business-related purchases. In all 48 jurisdictions FormsPal's verified state data covers, a contract to sell goods above a set sum has to be in writing before a court will enforce it. Under that sum, oral contracts should be enforceable by law, but it may be rather difficult to prove in court that the oral contract did take place.
Here are the top four reasons to create and sign an agreement between the buyer and the seller, plus a couple of alternatives that may work for you depending on the situation.
Miscommunication kills any and all business deals. You may have been expecting that you’re buying goods with a warranty of merchantability, but they’re sold as-is. Or you needed a shipment on a specific date but the seller shipped them right away and you’re now stuck paying for storage.
In an average deal, there are multiple factors that can go astray, and, depending on the gravity of the error, may cost you thousands of dollars. You certainly can have an oral agreement and even talk through all the details, but oral agreements have a single flaw that renders them borderline useless. People tend to forget things, and if you don’t have your agreement in writing, there’s basically no proof that, say, the delivery should be paid by the buyer.
A sales agreement solves this problem painlessly. Every bit of the deal from the date of delivery to how the buyer can inspect the goods is set forth in writing and signed. There could be no miscommunication in this scenario.
Another scenario where you need to put the entire agreement in writing is when you’re not paying with a lump sum but in parts. In this case, this legal document establishes the effective date of the deal, the deposit sum, and the way the rest of the payment is delivered to the seller.
If that’s the main reason for creating a sales agreement, it may also need a promissory note to go with it. This document is written by the buyer and essentially is a legally enforceable promise to pay a certain amount of money over a said period.
If both parties are meaning to have a long-term deal, you probably need a sales agreement. This agreement may set forth dates of all delivery operations and payment details of the buyer. The reason why either party would want to sign a written agreement on this type of deal is that it provides warranties to both the buyer’s and the seller’s parties.
Simply put, a sales agreement may be the thing that prevents missed payments and poor delivery timing. Both parties know that they may be sued for damages for breaking the terms of the agreement. So when a seller or a buyer agrees to certain terms, they will make sure to follow them to the letter, causing no trouble for the other party.
As per the Statute of Fraud in the Uniform Commercial Code, contracts for the sum of over $500 should be in writing to be recognized by the law. The legal system will enforce an oral contract if it’s under this sum, but no more than that as one party may try to defraud the other and this threshold was set as the arbitrary sum that most people can afford to lose.
If you’re making a larger business purchase, you may make use of a free sales agreement template and set every detail in writing. However, it’s not your only option. You can learn more about alternatives below.
A sales agreement may be a great solution for plenty of purchases, but you don’t need one for every purpose above $500. As per the Uniform Commercial Code, if the buyer and the seller want the agreement to be enforceable by the law the agreement has to be in writing. But that doesn’t necessarily mean you need a sales agreement.
For smaller purchases, especially private, not business ones, other forms of written documents can be enforceable. For instance, if the seller sends a buyer a pro forma invoice, it is legally binding. The same goes for purchase orders and order acknowledgments.
The only drawback is that while you can legally prove the fact of the agreement between the seller and the buyer, you will have a hard time proving the details. If details such as who bears the risk of loss or who pays the shipping costs matter to you, you would need to create and sign an agreement.
While sales agreement and bill of sale serve a very similar purpose, they’re not the same. To put it simply, a bill of sale indicates that the ownership of the thing being sold passes from the seller to the buyer. A sales agreement is usually signed before goods and money are being exchanged. This document establishes the intent of the buyer to buy and of the seller to sell said goods or services.
A sales agreement also contains a lot more information like the date of the delivery, buyer’s and seller’s warranties, etc.
The main benefit of creating and signing a sales agreement between seller and buyer is that you can avoid miscommunication. This means that any provisions like the implied warranty of merchantability and fitness, date of delivery, whether the buyer may inspect the goods prior to the purchase, etc are put in writing. This leaves no room for misunderstandings that may potentially hurt the parties involved.
A written sales agreement settles these points in advance:
In legal documents, warranties are not what the common use of the word means. Warranty, implied or express, is a legally binding claim about the product. An implied warranty is determined by the law that governs commercial agreements.
For instance, in 47 of the 48 jurisdictions FormsPal's verified state data covers, a warranty of merchantability is implied when the seller is a merchant of the goods being sold. The same goes for the warranty of title, i.e. the seller’s claim to have the legal right to own the goods they’re selling.
Then, there’s an express warranty. This type of claim or promise either by the seller or by the buyer that is explicitly stated. This may be a warranty of fitness for a particular purpose, i.e. a water tank that would fit a specific size of fish. Express warranty can be established simply by the seller’s conduct — if they’re not sure the product would fit the buyer’s needs, they shouldn’t be selling it to the buyer. However, it’s always best to include that warranty in the sale agreement.
Whenever there’s shipment of goods involved, either by the third party or the seller, there’s a risk of loss. Items are lost all the time by USPS and can be lost by the seller as well. A good agreement between buyer and seller elaborates on which of the parties is going to take that loss when the property doesn’t reach its destination.
Normally, if a third party handles the shipment, it should be insured and they will cover the cost in case of a loss. In terms of the sales agreement, this means the risk of loss is on the buyer. However, the seller may handle the delivery themselves. In this case, the seller is the party responsible for covering the cost of loss items.
Want to create a sales agreement? You can use free software on FormsPal to create your own agreement, customize it and print it out. Here are the main components you need to include in the agreement:
Seller and Buyer
The entire agreement wouldn’t make sense if there would be no information about the seller and the buyer. This is why the very first clauses should clearly establish the people or entities that are acting as a seller or a buyer in the agreement.
In some cases, you don’t have to include their address, just stating the name or the name of the business would be enough. However, it’s always best to include it for clarity.
The goods
Since the agreement at hand is about the sale of goods, the other detail you need to include is the description of goods being sold. Depending on the type of sale you’re doing, you may only include a purchase order where the goods are described. If the seller does not have any other documents describing the goods, the parties should add information about those.
Price and payment terms
The price for the goods also should go into the agreement — both the price for the individual items and the sum total. If the buyer intends to pay not with a lump sum, but in parts, that should be put in the agreement. It should specify whether there’s a promissory note or any other document that specifies the payment terms.
Delivery details
Depending on the way the seller and the buyer go about the delivery, you may also need to include information on the details of the delivery. At the very least, you’d want to include the information about the date of delivery and upon whom lies the risk of loss. If you want to be super clear on who is responsible for the lost goods, it’s best to explain what party is responsible in different scenarios so that both parties understand their responsibilities.
Inspection period and warranties
While some warranties are implied, it wouldn’t hurt to put them into the agreement along with the express warranties. If you as a buyer require the product fit for a particular purpose, make sure to ask the seller to provide an express warranty of fitness.
To make sure the seller delivered on their promise, the buyer reserves a certain inspection period. This period should be explicitly stated in the agreement. During the period, the buyer has the right to inspect goods and see if they are indeed what the seller has promised. If they don’t fit the standards set forth by the buyer, they can legally ask to change the goods or demand a refund. In the case where the buyer makes this claim after the period is over, they do not have legal standing.
Governing law
This is an optional thing to include, but some agreements include the governing law clause. This clause defines which state’s laws govern the deal.
If your case doesn’t require customization and you only want a standard sales agreement template, you can download one here. Here is how you fill it out, one step at a time.
It depends on the price of the goods. Each of the 48 jurisdictions FormsPal's verified state data covers has a statute of frauds rule that requires a signed writing for a sale of goods at or above a set price. A written contract also makes the terms much easier to prove, whatever the price.
All 48 jurisdictions FormsPal's verified state data covers set a default rule for when the risk of loss passes from the seller to the buyer. The rule changes with:
Name the responsible party in your contract so neither side has to guess who pays if the goods are lost or damaged.
A sales contract sets the terms of a deal and is usually signed before goods and money change hands. A bill of sale records that ownership has passed to the buyer. Many deals use both documents, one after the other.
In 47 of the 48 jurisdictions FormsPal's verified state data covers, the implied warranty of merchantability applies unless the contract excludes or modifies it. If you want different terms, put them in the written contract and read that clause closely before you sign.
General information, not legal or tax advice.
Last Updated: October 2026. This guide is reviewed and updated regularly to reflect current law. If you notice an error or outdated information, please contact us.