Mistake
Risk of loss not specified
Without a clear risk-of-loss clause, both sides may argue the other bore the risk when goods were damaged in transit. Specify FOB origin or FOB destination.
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What a sales agreement is for
A sales agreement documents the terms of a transaction — what is being sold, at what price, how and when it will be delivered, what warranty applies, and how payment is structured. It turns a purchase order or handshake into a legally binding transaction record.
Businesses selling products, equipment, or services in transactions where price, delivery, or warranty terms need to be documented. B2B sales with custom terms, installment payment plans, or specific delivery requirements.
For any sale above a few hundred dollars where there is a reasonable chance of a delivery dispute, warranty claim, or payment disagreement. The agreement is your defense against "that's not what I ordered."
Not needed for simple retail point-of-sale transactions with standard return policies. Use a service agreement rather than a sales agreement when the primary deliverable is services, not goods.
What BizDraft asks you
Seller and buyer names, entity types, states.
What is being sold — description, specifications, quantity.
Total price or unit price, taxes, shipping and handling.
Full payment upfront, deposit, installment plan, or net terms.
Delivery date, method, location, risk of loss transfer point.
Express warranty scope and duration, or disclaimer of implied warranties.
Return policy, defect claims process, governing state law.
What the AI generates
Plain-English, UCC-aware, ready to execute. The sections that govern a sale from order to delivery to payment to warranty.
Detailed description of what is being sold, quantity, specifications, and condition. The reference point for any dispute about whether what was delivered matches what was ordered.
Total price, applicable taxes, deposit requirement, payment milestones, due dates, and late payment consequences.
Delivery date or window, delivery method, delivery address, risk-of-loss transfer point (FOB origin or destination), and what happens on delivery delay.
When title transfers from seller to buyer and when the buyer bears the risk of damage or loss during transit.
Express warranty duration and scope — or disclaimer of implied warranties of merchantability and fitness for a particular purpose where the seller wants to limit warranty exposure.
Defect inspection period, return authorization process, remedy options (repair, replace, refund), and limitation on consequential damages.
Common mistakes
The most common reasons sales transactions turn into collection problems or warranty disputes.
Mistake
Without a clear risk-of-loss clause, both sides may argue the other bore the risk when goods were damaged in transit. Specify FOB origin or FOB destination.
Mistake
A warranty without a defined duration, scope, and exclusions invites endless claims. Be specific about what you warrant, for how long, and what you do not warrant.
Mistake
Without a defined inspection and rejection period, the buyer can claim defects months after delivery. Require inspection within a defined window and provide that silence constitutes acceptance.
Mistake
Installment sales without a late-payment clause and a clear default-and-acceleration provision leave the seller without leverage when payments stop.
Example
"Selling refurbished industrial equipment to a manufacturer. $85,000 total. 30% deposit, balance net-30 from delivery. FOB seller's warehouse. 90-day parts warranty. Buyer has 5 business days to inspect and reject. Arizona law."
A 10-section sales agreement, Arizona-governed. $85,000 with 30% deposit and net-30 balance. FOB seller's warehouse — risk passes to buyer at pickup. 5-business-day inspection period, deemed accepted if silent. 90-day parts warranty, labor excluded. Late payment at 1.5%/month with acceleration on default. UCC Article 2 governs.
Word (.docx) for editing in any tool. PDF for sending out as-is. Both formats, no watermark, no account needed.
When to ask a lawyer
BizDraft is a drafting tool. It is not a substitute for a lawyer who knows your specific situation. Reach for one when:
Sales over $250,000, particularly for equipment or specialized goods, should have attorney review of the warranty, liability, and risk-of-loss provisions.
If the sale includes real estate or fixtures permanently attached to real property, a real estate attorney must be involved — UCC Article 2 does not govern real property sales.
Selling goods that could injure users if they malfunction — tools, equipment, consumables — requires product liability consideration in the warranty and indemnification clauses.
FAQ
A purchase order is the buyer's offer to buy — it specifies quantity, price, and delivery. A sales agreement is a negotiated bilateral contract setting terms that bind both sides. For recurring relationships, a sales agreement (with standard terms) backed by individual POs is the most efficient structure.
Free on Board — it defines where risk of loss transfers. FOB origin (seller's location) means risk passes to the buyer when the seller hands the goods to the carrier. FOB destination means the seller bears risk until goods arrive at the buyer's location. For high-value goods, FOB destination protects the buyer.
Yes, in most B2B transactions. UCC Article 2 allows disclaimer of the implied warranty of merchantability (goods are fit for their ordinary purpose) and fitness for a particular purpose, as long as the disclaimer is conspicuous (usually in caps or bold). Consumer sales have more restrictions.
The agreement should include an acceleration clause — if any installment is missed, the entire unpaid balance becomes immediately due. The seller may also have repossession rights if a security interest was retained. Make sure these remedies are in the agreement before the first installment is due.
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