8 JUNE 2018

What You Need To Know About Preparing a Sales Agreement

You are a business owner. You know that doing business means moving goods and services. You've been doing this since day one. You start talking with a new partner, come to an agreement and then money changes hands. That's business. With a small business, transactions really are that simple. Business to Business (B2B) e-commerce in Malaysia is booming though. Small businesses don't stay small for long. With an annual sales turnover of RM315.2 billion, B2B transactions make up a whopping 79.2% share of the entire e-commerce market. Once your business starts to grow, it becomes important to use legal documentation. There is more at stake. Agreements that used to be done with a single handshake are safer when they are put down in writing. Let's take a look at how a written sales agreement can protect your business.

What is a Sales Agreement?

Business Dictionary, an online business glossary with over 30,000 definitions, describes a sales agreement as a "contract under which the ownership and possession of a good, or entitlement to a service, is transferred from a seller to a buyer in exchange for a specified sum of money". Essentially, this is a business document stating that both parties will do what they say they are going to do. One will give up a product and the other will pay money for it. Prevalent in large-sum business deals, sales agreements are a common tool that ensures every detail has been discussed before a single ringgit changes hands. Once it is signed by both parties, although the product and money haven't had the first transfer yet, it becomes a legally binding document. This document is perfect for handling repetitive business-to-business transactions, known as an agreement for the supply of goods, or services agreement in the case of provision of general services.

Document Details

A sales agreement generally addresses the following terms:

  • Description of the goods or services;
  • Price and payment;
  • Delivery timing and consequences of late delivery;
  • Acceptance and rejection of goods or services;
  • Consequences of non-payment;
  • Title and risk; and
  • Rights of cancellation.

Legal Repercussions

Getting this in writing prevents parties from backing out of long-term agreements at the last minute. If one party does back out, the penalties of the agreement will protect the other company and mitigate any negative consequences. When 20+ jobs hang in the balance, your deals as a business owner have a real impact on your employees. Imagine hiring a bunch of people to execute a large purchase that never comes. This document can include consequences that protect the salaries of your workers. For small to medium sized businesses, this type of business document is crucial for maneuvering the company's future because it is recognized by law in domestic contracts. Business owners in Malaysia can use legal templates and other business documents to ensure that their paperwork is valid and enforceable.

Legal Documentation for Small Businesses

As a service to small- and medium-sized businesses, legal document service providers like ShakeUp! allows you to create documentation primarily from the supplier's perspective. For example, the Agreement for the Supply of Goods template in ShakeUp!'s business document library has been drafted to give effect to the supplier's intentions and as far as possible, limit the seller's potential exposure to liability. Though large companies may have an in-house team of lawyers, smaller companies can still execute fair and legal business transactions using a prepared sales agreement template. Is your company using the proper documentation to carry out transactions?

Browse through ShakeUp!'s business document library to find useful legal document templates for your company.

Sign up for a trial subscription and gain access to our business document library absolutely free. Learn more about creating your own legal documents at ShakeUp!

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