A sales agreement is a contract agreement between a seller and a buyer showing that the ownership of goods has been transferred from the former to the latter for a certain amount of money or showing that the buyer is entitled to a certain service from the seller.

Also known as sales and purchase agreements in some quarters, sales agreements obligate sellers to sell their wares and buyers to buy the products or services.

The usage of sales agreements

Sales agreement contracts are used in a wide range of businesses. However, none is as popular as in the real estate industry where it is used as a means of expressing the interests for both parties so as to finalize a deal. Another area of trade where sales agreements are popular is in the supply chains involving most large publicly traded companies and here they are used as a means of predicting prices in relation to profits.

In deals where they are used, sales agreements serve as the foundation upon which the deal happens, providing guidelines on how the deal will be carried, what the deal includes and in some cases what it doesn’t. In addition to controlling the sale’s terms, sales agreements often contain extensive information of the participants of a deal.

In complex deals, sales agreements serve as a record of the proceedings of the negotiations and deal-making: what deposits were made, which transactions or part of transactions are complete and so on.

Sales agreements are also utilized when a buyer is buying large amounts of products from a supplier. Such as single large-scale purchases as well as in business deals that involve revolving purchases and supplies such as monthly or half-yearly deliveries. In such cases, sales agreements may even be used to set the price of commodities beforehand even if the delivery is spread annually.

Finally, a sales agreement is used in cases where a company is taking over another. They show in great detail what is being sold or bought or what proportion or percentage. For instance, it will show if the selling company only wishes to sell the tangible assets and retain naming rights.


Certain factors may arise that may force the seller, the buyer or both of them to add terms or other extensions to the preexisting sales agreement. These extensions are known as addendums. They are necessary when:

  • More time is required for the completion of part of the agreement
  • Repairs are required
  • In the need for further inspection
  • In the occurrence of factors affecting or upsetting the existing terms of an agreement.