10 Essential Sales Legal Documents for Small Businesses

10 Essential Sales Legal Documents for Small Businesses

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Sales drive the revenue for a business and you need to secure this revenue by having the right legal documents that are tailored to your business requirements.

DocLegal.Ai will list the 10 legal templates that your sales team will need to run the business smoothly. 

1. Sales Outreach Letter 
2. Sale Agreement
3. Quote Template
4. Terms and Conditions for Sale of Goods
5. Sale Representative Commission Agreement
6. Purchase Order
7. Proforma Invoice for the Purchase of Goods
8. Distribution Agreement
9. Sale Receipt
10. Sales Communication Template

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1. Sales Outreach Letter

A Sales communication letter is used to promote your product and drive sales for your business instantly.

Generate this letter using DocLegal.Ai to seamlessly convey:

• Your company’s experience and the geographic coverage of your market
• Assures about quality and quick delivery of your product
• Price Details
• Instructions on how to place an order

2. Sale Agreement 

• Sale of Customized Product Agreement and Sale of Regular Product Agreement

If you are a business owner then you are already aware of the importance of a Sale Agreement. 

There are two types of Sales Agreement that you may need for your business:

• Sale of Customized Products Agreement provides that the Buyer and Seller agree to develop and supply a Product to meet the Buyer's specific requirements.  
• A Sale of Regular Product Agreement provides for a one-off purchase of goods/products. The Buyer will use the goods for its own use or resell them under its own brand.  The Seller shall sell and the Buyer shall purchase the agreed quantities of the Products subject to the terms and conditions of this Agreement.

But how to identify if the sales agreement is right for your business? The important provisions in a Sales Agreement are:

1. Delivery terms

• Transfer of Risk:  when does the risk pass to the buyer?
• Supply Shortage: what happens in case of shortage in supply:
• Delay in Delivery: Is delay in delivery a breach of contract?

Sample clause:

“Risk to the Products shall pass to the Buyer upon delivery to the carrier. Shipping information from the Seller will be sent to the Buyer no later than 5 business days after the shipment leaves the Seller's facility. The shipping information will include the model number and quantities, method of shipment (air-land), date of shipment, shipment number, and any other information allowing easy identification of a delayed or lost shipment.”

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2. Payment terms 

• Payment Schedule and penalty for late payment

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3. The popular ‘As Is’ language

• As common as this is, it is important to have incorporated a comprehensive ‘As IS’ clause i.e. the products are sold on an ‘As Is’ basis and the seller is not responsible for the defects after sale of the Product.

Sample Clause:

“The Buyer understands that the Products are being sold on an AS IS basis. No term, condition or warranty (whether express or implied) as to the nature, quality or fitness of the Products for any purpose or their conformity with any sample shall be part of any contract between the Seller and the Buyer. The Buyer acknowledges that the Seller has not given any warranty that the Products are fit for a particular purpose or will achieve any particular performance criteria.”

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4. Termination 

• Events of Default: what events will constitute an event of default?

Sample Clause:

“If either party should default in the performance of any material obligation assumed under this Agreement (an Event of Default), then the non-defaulting party may give written notice to the defaulting party which notice shall specify the Event of Default.”

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5. Limitation of Liability for buyer and seller

• Limit the liability incase of any indirect, special, incidental or consequential damages (including loss of profit) .

Use DocLegal.Ai to add a Limitation of Liability Clause for your Agreement

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6. Force majeure 

• Considering the impact of Covid, we have understood the importance of a force majeure clause and it is part of the list for essential clauses for an agreement now! 

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 3. Quote Template

Can I get a Quote? This is one of the first questions each department of your business will receive when transacting with customers.

Hence, it is important to have a ready template for providing Quotes to your customer that is comprehensively applicable to different business transactions and effectively protects your business operations. 

Useful Tip: Maintain a central repository for all your legal templates, and provide access to the relevant teams to ensure the uniformity in the documents used by different teams across the business.

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What does a Quote Template include? It sets out the requirements of the customers and how the requirements would be met:

• customer's name, quote number, date, and the validity of the quote
•  business name, email, phone, and address
• summary of the customer's requirements including detailed information about products or services
• outlines the pricing, terms, and conditions of a proposed transaction.

This effectively communicates the value proposition of the business and convinces the customer to make a purchase.

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4. Terms and Conditions for Sale of Goods  

Do you need Terms and Conditions for Sale of Goods considering you have the Sale Agreement already in place? 

Yes, you need Terms and Conditions for Sale of Goods and the Sale Agreement.

Sales Agreement will outline the terms and conditions of a specific sale and include price, delivery, payment terms specific to a sale transaction between the buyer and seller. The terms of a Sales Agreement would often be negotiated between the parties.

While, the Term and Conditions for Sale of Goods outline the terms and conditions that generally apply to all sales. For example, clauses like warranties, refund and replacement that are not particularly listed in a Sales Agreement. 

This ensures uniformity in terms of the t&cs that will apply to each and every sale. This document can often be attached to a purchase order, especially where it is not open for negotiation with other parties.

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5. Sale Representative Commission Agreement

Are your employees driving all the sales of your company or you’re hiring contractors, agents to promote your products and generate business for your company?

If you are engaging agents and contractors to generate business then you should use a Sale Representative Commission Agreement.

The question we mostly get is, Can’t I just use the standard Independent Contractor Agreement for this? Well, just like one size doesn’t fit all in life, the Independent Contractor Agreement will not cover the specifics of a Sale Representative Commission Agreement.

While Independent Contractor agreement has the essence of the independent contractor relationship, using a Sales Representative Commission agreement will provide added benefit as it will be tailored for a sales - commission based transaction.

However, if you ask can I customize an existing Independent Contractor Agreement and use it for this purpose? Probably yes, however, you’ll need to be a lawyer to customize it effectively. This multiples your cost and reduces your revenue.

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6. Purchase Order

A Purchase Order is, ideally, the step after the Sales Agreement. 

However, we all know sale agreements are heavily negotiated and the back and forth between the legal teams of two parties is a time consuming affair. 

Hence, mostly I have seen that parties try to secure the transaction and the price by executing a purchase order while the sale agreement is being reviewed by the legal teams.

You need a robust Purchase Order that ensures all the vital commercials are locked in to ensure business continuity. 

Use DocLegal.Ai to generate a Purchase Order you can trust for your business.

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7. Proforma Invoice for the purchase of Goods.

Proforma invoices are commonly a key part of international transactions to declare the value of the goods to customs for determination of duties and taxes.

So, what is the purpose of Proforma Invoice?

For the purpose of Buyer:  Proforma Invoice enables buyer to evaluate the cost, arrange financing and arranging of import permits

For the purpose of Seller: sets expectation as regard the cost and delivery before moving ahead with the transaction.

Who will issue the Proforma Invoice? 

Seller issues the Proforma Invoice providing an estimate of the transaction to the buyer

Here’s what you need to know about Proforma Invoice:

1. It is issued by the seller before the final sale and delivery of the goods
2. It sets expectation of the customer regarding cost and delivery i.e. the intent to purchase
3. It is not legally binding
4. This can be used to secure a letter of credit or to arrange financing
5. It is used to provide a detailed breakdown of the items or services being sold, along with their corresponding prices and quantities. 

Example of when you need a Proforma Invoice:

If you want to import certain goods from a foreign supplier then ask for a proforma Invoice to get an estimate of the transaction before agreeing to the purchase. DocLegal.ai can be also used as Invoice AI Generator.

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8. Distribution Agreement

The Distribution Agreement (with Sub-Distribution Rights) is a legal document that establishes a contractual relationship between two parties: the Company and the Distributor. 

The agreement is entered into with the aim of extending the area in which sales are made to a specific territory. The Company wishes to appoint the Distributor as its exclusive distributor of products for certain applications in the territory, and the Distributor has agreed to accept such appointment subject to the terms and conditions of the agreement.

Generate Distributor Agreement Template for your Business with DocLegal.Ai

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9. Sale Receipt

A sales receipt typically immediately follows the sale of a good and is provided by the seller. 

The Sale Receipt document is an important document that serves as proof of purchase for a transaction. It is used to provide a detailed record of the items purchased, their quantities, unit prices, line totals, and the total amount paid.

After the customer successfully purchased one or more items from a shop or a company, a receipt should be issued to them to prove that the sale has been received and the purchasing procedure has been completed. The receipt also acts as a reference for the customer to realise the details such as the price, and quantity, of his/ her purchase.

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10. Sales Communication Template

Automating operations is essential to streamline business operations. Your team shouldn;t spend their time drafting emails or letters communicating discounts, handling discount refusal and such other routine communication.

With DocLegal.Ai, you can automate your business operations by generating sales communication templates.

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Common FAQs regarding Sales Documentation:

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1. Sales Order vs. Invoice - What is the difference between Sales Order and Invoice?

The main difference between a sales order and invoice is that a sales order is created by a vendor to confirm they can provide the goods or services requested. On the other hand, an invoice is normally created to request payment for goods or services that have already been provided to the buyer. Online invoice generator can be used in this case just by using DocLegal.AI

These sales orders are typically provided by the seller. As the transaction is likely to be online and thus done through mail, fax, e-mail or other instantaneous communication methods, you should ensure that all the required information is provided to the customer, including; 

1. name of product/service,
2. product/service code or number,
3. unit price, sales tax and discount/ payment terms (if any),
4. quantity ordered,
5. pick up or delivery address,
6. required date of delivery/service, and
7. payment method (enclosing cheque, transfer or by installment). 

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2. Receipt vs. Invoice - What is the difference between a receipt and an invoice?

It is important to note that receipts are not the same thing as invoices, although they may seem similar. While receipts are given to the customer after a sale, invoices are provided before any money is sent by the customer. DocLegal.AI will help you as Ai invoice template generator.

Therefore, you should ensure that your invoice contains a due date for the payment, as well as the date that the invoice was sent to the customer. This ensures that any late payments from the customer can be followed up efficiently and in a transparent manner. 

Conclusion

In conclusion, these documents for your sales department form the foundation of every successful business and are sure to help you increase efficiency and profitability.