Set up sales a contract
How a sales contract is a vital element in business sales and how to create a contract that complies with customer protection regulations
A sales contract is an agreement that defines the rights and obligations of both the seller and buyer, and is an essential element in any business selling products and services.
Your business should take legal advice on creating a sales contract and tailor it to suit the specific needs of your business. See choose a solicitor for your business.
Displaying terms and conditions
If a customer pays for an item when they buy it, they automatically accept the terms of the sale at the point of purchase. You can display your policies, terms and conditions and warranties on invoices, bills, your website or in your shop.
Key issues in sales contracts
The key issue with a sales contract is when it came into existence - when an offer is made and accepted. Unless your terms of trade have been agreed before this, they do not apply. At the same time, anything salespeople have promised is likely to become legally binding if the customer is relying on it. This applies whether a salesperson has agreed something in writing or not.
Unfair trading and consumer protection regulations
You can comply with most sales regulations in one simple step: by avoiding unfair trading and misleading marketing. Although the detailed requirements are extensive, common sense and an honest approach to doing business covers most of the ground.
Under the Sale of Goods Act, products sold must at least:
- match their description
- be of satisfactory quality
- be suitable for their intended purpose
There are similar requirements that apply to the sales of services.
See customer protection.
Other key selling laws
If you sell via the internet, by mail order or telephone, the distance selling regulations will apply. These regulations give consumers some rights to cancel purchases.
You should seek legal advice to understand any other regulations that may apply to your particular products or services, eg offering consumer credit (which generally requires a licence) and data protection for customers' personal information.
Drawing up a sales contract
Your sales contract should reflect particular aspects of your business and have clear terms and conditions, such as:
- parties involved - clearly identify the buyer and the seller
- description of goods or services - provide detailed information about what is being sold
- price and payment terms - specify the price, payment method, and payment schedule
- warranties and warranties - outline any warranties or guarantees provided by the seller
- delivery terms - describe how and when the goods or services will be delivered
- return and refund policy - include terms for returns and refunds
- liabilities and responsibilities - define the responsibilities and liabilities of both parties
- dispute resolution - state how disputes will be resolved
- signatures - both parties should sign the contract to make it legally binding