What is a sales contract, types, and parts of a contract - A complete guide

Sales Contracts Guide – Contract Types and Parts of a Contract

Dear Sales Champ,

Kudos to you!

You have landed a big-ticket customer. Your months of toil, rounds of counteroffers, calls, presentations, and unending discussions have finally paid off. 

The next step is to sign a sales contract and brace yourself for unforeseen circumstances. 

A sales contract is a binding agreement to lock the intent of the parties and ensure your business is protected from future disputes. It is also a bilateral contract where each party agrees to honor their side of duty.

Types of contracts and parts of a contract can differ to represent the right services and goods exchanged between buyers and sellers.

But most businesses struggle to create watertight sales contracts. 

Well! We’ve got your back.

Read on and grasp everything about sales contracts.

What is a sales contract?

A sales contract embarks the beginning of a new business relationship. It happens when both parties come to a meeting of the minds to sign a legally binding contract.

It is an enforceable contract that documents an exchange of goods or services, the terms of the exchange, and the parties involved.

Why is a sales contract important?

  1. Increase transparency – It doesn’t leave any scope of misrepresentation and sets the right expectations. Being a valid contract, it acts as proof of an offer and acceptance between the parties and makes the parties stay true to the agreed parts of a contract.
  2. Enforceable contract – It compels both parties to enter into mutuality of obligation due to a signed and legally bound written contract. 
  3. Legally binding – Being a legal contract, it protects both parties under the contract law in case of disagreements. Read here to know how to make a contract legal with the right elements.

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What constitutes a sales contract? – Elements of a contract

Here are the essential parts of a contract:

  • Name, address, and contact information of the parties
  • Description of goods or services
  • Prices and payment terms
  • The delivery method of goods/services
  • Warranties and guarantees from the seller, including the disclaimer to be agreed by both parties
  • Contingencies specifying what is to be done in certain situations, also make sales contracts voidable
  • Inspection period to check the goods after delivery and reject any nonconforming goods
  • Confidentiality term to limit the distribution of sensitive information
  • Measures to be taken in case of breach of contract
  • Governing laws

Read the blog to know more about contract management software.

When do you need it? – The legality of sales contracts

Whether you are a small or big business, sales contracts are a must for swift transactions between the parties involved. 

The Uniform Commercial Code’s (UCC) statute of frauds requires that those in the United States create a written contract for any interactions worth more than $500. 

A statute of frauds is a state law that generally requires certain contracts to be in writing and signed by the parties for them to be enforceable. As per the UCC, a written sales contract should define the parties involved, the subject matter to be sold, and any material or particular terms or conditions.

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7 essential types of contracts in sales

1. General Sales Contract Agreement 

It is a general-purpose written contract between a seller and a buyer. Most sales agreements are a modified version of this template. It comprises all the elementary information – terms of the contract, delivery details, parties involved, and more.

2. Conditional Sales Agreement

Here, a buyer takes possession of a good or an asset but doesn’t own exclusive rights to them. The seller retains the rights until the price is paid in full. For example, in real estate, a buyer takes possession of a property but doesn’t own it until he/she has paid the total price.

3. Agreement for Sale

These enforceable business contracts play a vital role in real-estate deals and act as an agreement to sell a property in the future. It specifies the terms and conditions of a property’s sale by an offeror (seller) to a promisor (buyer).

4. Contract of Sale of Business

Also called a ‘sale of a business’ or ‘business transfer agreement’, it is a bilateral contract between the parties when they want to buy/sell a business. It outlines the terms and conditions of a business sale.

5. Sales Contract Addendum

The word ‘addendum’ means something that has been added to a book, speech, or document.

A sales contract addendum serves as a supplementary agreement/document attached to an existing contract. It allows businesses to add more information without changing the original terms. It is a convenient way to expand the terms of an agreement in the same document instead of producing a new one. 

If there is any alteration in the original one without a separate document, it is an amendment and not an addendum.

6. International Sales Contracts

It is a binding contract between a buyer and a seller that identifies the parties in the transaction, the goods or services being sold, the terms and conditions of the sale, and the payment conditions. It is written to govern trade relations between companies in different countries. It falls under the United Nations Convention on Contracts for the International Sale of Goods (CISG).

7. Automobile Sales Contracts

This business contract is a legal document used to conclude the sale of a used automobile after mutual assent between the parties. It allows independent purchasers/sellers or companies to buy and sell used vehicles and specify all the terms and negotiations in the document. 

The essential elements of this binding agreement are – delivery terms, negotiated price, warranties by the seller, and buyer’s commitment like payment terms.

Contracts are also divided into unilateral and bilateral contracts. Read the blog to know more about the differences between unilateral and bilateral contracts.

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Amazing benefits of creating sales/business contracts in Revv

  • Create documents from Revv’s vetted and ready-to-use 1000+ professional document templates. Here is a list of the best contract templates that small businesses need
  • Design stunning contracts with the feature-rich document editor. With a simple drag and drop you can add text and images, insert quote tables, connect your Google Sheets, integrate payment systems, and more, without writing any code
  • Collaborate with users within the document through notes, comments, and tag them with the @mention feature
  • Send documents for eSignatures with just a few clicks
  • Track activity on documents with real-time analytics – who opened it, signed it, etc.
  • Receive email alerts on document’s status change
  • Get legally binding audit trails for all your eSigned documents and avoid disputes
  • Customers can access the sales contracts from any device and sign them from anywhere, at anytime
Want to take the hard work out of drafting contracts?
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Choosing a contract management software for your business is an uphill task. Read this blog and discover the factors to consider while choosing a contract management software.


Many things can go sideways in a business. An oral agreement in such cases can leave you stranded in the middle of nowhere.

It becomes of utmost importance to bring in a legality angle. Safeguard your business with irrefutable sales contracts and lucidly written parts of a contract.  

Revv’s advanced features help to create the best digital sales contracts within minutes.

Sign up for free and try it yourself!

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Seema is a Product Expert at Revv. She believes in the power of words and storytelling. She spends most of her time in creating exciting and knowledgeable content. When not working, you can often find her watching adorable pups videos, dancing for no reason, or experimenting with recipes.

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