A contract of sale is any formalized agreement between a buyer and seller that outlines terms and conditions by which the buyer agrees to purchase a product or service, and a seller agrees to sell it. A legal contract document requires signatures from both the buyer and seller or their legally authorized representatives.
Individuals and business use a number of types of contracts of sale or sales contracts. One of the simplest types of contracts of sale is a sales invoice sent by a supplier to a buyer for the purchase of materials or goods. It outlines the quantity and price of the items purchased and terms of payment. Prospective home buyers submit a purchase contract offer to a seller that must sign the contract and agree to terms for it to become a contract of sale.
Sale or Barter
In simple terms, a sale is a purchase of a product or service with monetary currency. A barter is an exchange of two goods or products with no monetary currency involved in the transaction. The word barter is sometimes used in casual conversation to describe informal sales agreements reached through spontaneous negotiation. However, a true sales contract must include money as the buyer's consideration in the agreement.
Informally referred to as a clean sale, an absolute sales contract is a sales agreement without conditional provisions or contingencies. This is the simplest type of sales contract to execute as both parties agree to the basic terms of the purchase when they sign the contract. The buyer agrees to the price and the seller agrees to transfer title, deed or property rights to the buyer with no contingencies.
A conditional sales contract is one that contains contingencies. Contingencies are exceptions to the contract terms that could make the contract void if conditions are not met by a stated deadline. In real estate sales contracts, a common contingency is that a buyer must sell his own home before a purchase on a new property is completed. Contingencies typically protect a buyer from a devastating financial predicament. Generally, if contingencies in a sales contract are met by the agreed upon deadline, the sale is considered final. If they are not met, the parties can agree to an amended contract or the sale is cancelled.