What is a Contract of Sale?

A contract of sale is a legal agreement for the exchange of some type of property, goods, or services. It details the agreement between the buyer of the property and the person or company that is selling it. A contract of sale includes information regarding the property that is being exchanged, the amount of money the buyer is paying for it, and the terms and conditions of the sale.

When a contract of sale is drafted, it contains information about both parties involved in the sale. Full names are used on this type of contract, and one party is designated as the seller while the other party is designated as the buyer. The contract includes a date on which it was signed and text that stipulates the contract is for the agreed-upon sale of a particular piece of property.

This type of contract also includes a description of the property that is to exchange hands. If the property is real estate, for example, the description will include the property's physical address. It will also list anything that is included in the sale, such as personal property, improvements, and land surrounding a building.

The purchase price and payment details are important parts of a contract of sale. The document typically lists the exact amount the buyer and seller have agreed to for the exchange of the property. If the purchase will be made in installment payments instead of a lump-sum amount, the contract will indicate that. Sometimes the buyer provides a deposit on the item he’s buying. In such cases, the contract of sale lists the amount of the deposit and any details regarding how it is to be paid and handled.

If there are intricate details involved in the sale, the contract of sale will include them. Every financial detail is spelled out in a contract of sale so there is no confusion as to who is to pay which amount and when the payments are to be made. If the buyer will have a balance to pay in order to complete the sale, for example, the contract will include this information as well. Sometimes it will also stipulate that the contract is subject to the buyer's ability to obtain a loan to purchase the property.

The rights assigned to both the buyer and seller are usually included in a contract of sale. For example, the buyer may have the right to thoroughly examine the property before paying for it. Either the buyer or the seller may have the right to cancel the sale if certain conditions are not met. These conditions are spelled out in the contract. Likewise, the contract may include details about any warranties included as part of the sale.