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Elements of a Good Sales Contract

Date: 03/12/2007 | Category: Business | Author: developers

If your small business generates revenue from direct sales, you need a contract that sets the price, terms and conditions of each sale. Why? Because when you have an all-encompassing sales contract in place between your clients and yourself, you prevent possible future disputes from arising over payment terms, late penalties and other details that not only affect the sale but your future relationship with your client.

Sales contracts do not need to be elaborate, legalese-speaking documents that require a dictionary to interpret. It simply needs to address key elements in a straight forward manner. A strong sales contract will mention:

  • Price – include any discounts, delivery or additional incidental charges that the client should be aware of when purchasing your producs or services.
  • Price adjustments – will you offer some type of price adjustment for large orders or to clients who have remained loyal for some time?
  • Taxes – Clearly state if the client is responsible for any sales tax.
  • Payment and credit terms – Clearly state when payment is due. If you allow purchase on credit, spell out payment terms, including any discounts for early payments or finance charges for late payments.
  • Warranties – If you offer any type of warranty provide detailed information on exactly what that warranty covers and for how long.
  • Disclaimers – Include the following standard disclaimer in capital, boldface letters so that it stands out: “There are no other warranties, express or implied, including merchantability or fitness for a particular purpose.”
  • Limited-liability claims – Try to create a sales contract that limits your liability. A common clause for liability states that the seller’s maximum amount of liability is equal to the purchase price. These clauses do not always hold in a court of law, but there is no harm in including a section that states you’re not responsible for consequential damages, punitive and speculative damages, or lost projects.