Sales Contracts for Small Businesses

Many companies sell a product and therefore need a good Sales Contract. The Sales Contract lays out the price, terms, and conditions for the sale of goods, equipment, or other products. The actual Sales Contract can take the form of fine print on the other side of an order form or an invoice, or it

From your company's perspective, you always want to start with your own form. Having your form preprinted helps it look "standard" and nonnegotiable. (Note: No standard form of Sales Contract actually exists.) As the drafter of the Sales Contract, you can make the contract more favorable to you as the seller. Here are some important terms to potentially address in your Sales Contract:

• Price: Make sure that the Sales Contract correctly and clearly states the price (often by filling in a blank space provided on the form). The Sales Contract also needs to spell out any discounts, installation charges, and delivery charges.
• Price adjustments: Consider how you may increase the price from time to time if you are entering into a long-term contract.
• Taxes: Try to ensure that the purchaser is responsible for all sales taxes.
• Payment and credit terms: Make sure to state when payment is due. If you do not require immediate payment, consider a small discount to the purchaser if payment is made within 10 days and a finance charge if payment is late (such as 30 days past due).
• Warranties: Decide what warranties you want to give. Ideally, you want to limit warranties, but the competitive marketplace may require you to grant extensive warranties. Typical warranties state that for a designated period, the goods sold will be free from defects of workmanship and will conform to designated specifications. Any necessary repairs will be under warranty for that designated time period.
• Disclaimers: State clearly in your Sales Contract (after you have set forth what your warranties are) that no other warranties exist, express or implied, including merchantability or fitness for a particular purpose. This disclaimer is usually in all capital letters or boldfaced to stand out and comply with certain provisions of the Uniform Commercial Code.
• Liability limitations: Use the Sales Contract to attempt to limit your liability under the contract. A typical clause for liability states that the seller's maximum amount of liability is equal to the purchase price. Make sure, too, that you include a sentence that says you are not responsible for consequential, punitive, or speculative damages or lost profits (although some laws may limit successful enforcement of this clause).