What Should a Sales Agreement Include?

Name: Quality Business Plan by Dr. Paul Borosky
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The Short Answer

What Is a Sales Agreement?

Textbook Definition

A sales agreement is a written document, signed by buyer and seller, that records the terms of a transaction, including the parties, the goods or services, quantity, price, timing, payment, and remedies if either party fails to perform.

In Plain English

It is one page that writes down what you and the customer agreed, so neither of you has to rely on memory later. A good sales agreement covers the details, the money, the deposit, and what happens if someone backs out.

Why It Matters

Why Do Handshake Deals Fall Apart Between Honest People?

Most deal disputes are not about lying. One side hears "we'll offer forty" and the other hears "we'll buy forty." Both shake hands in good faith. Weeks pass, the two versions slowly drift, and each person is sure they are right.

Putting it in writing fixes that before it starts. A short page that names the specifics, the deposit, and what happens if someone cancels usually costs far less than the argument it prevents. It also tends to bring an honest number into the conversation early, while both sides are still friendly.

Signs you have this problem:

Your biggest customer is booked on a phone call or a handshake.
You have hired help or paid deposits based on a verbal yes.
You and a customer have argued over what was "agreed."
Your paperwork never says whether the buyer is committed or just interested.
Nothing you use says what happens if someone cancels.
Two of your own documents give different payment terms.

A handshake proves you both meant it. It does not prove you both meant the same thing.

What It Looks Like

What It Looks Like When the Deal Lives Only in Memory

From the Fabled Forest · Chapter 15

Commander Colt, the horse who runs Forest Trails and Tours, shook hands with a gull clerk at the ferry company's tour desk on forty seats a week for the ten weeks of autumn. Trusting it, he hired two guides and put money down on a second bus. Then a note arrived: the desk might manage twenty seats weekly, if any were free.

In the office of Lenora the Lynx, a lawyer, Colt found out how little had been settled. When did it start? When did it end? What did each seat cost? Was the desk buying the seats or only offering them to travelers? Nobody had said. Lenora wrote one page on the spot covering the parties, the seats, the count, buy or offer, the dates, three coins a seat, a deposit, and cancellation terms, with two lines for signatures.

At the tour desk, the clerk admitted he had said yes but meant something different. He could honestly commit to thirty seats a week, bought outright for the full ten weeks. Colt accepted. The clerk paid a deposit of one hundred twenty coins, both sides signed, and they shook hands again, this time with the page between them. From then on, Greta clipped a copy behind every booking on the office board.

Colt's story is Chapter 15 of Sales for Small Businesses, Book 5 of Dr. Paul's Fabled Forest Business School Series.

The Fix

How to Write a Sales Agreement in 4 Steps

One page. Plain words. Both signatures.

Cover the essentials on one page.
Name who, what, how many, when, and how much. Say whether the buyer is committing to buy or only agreeing to try. Add the deposit: the amount, who keeps it, when it is returned, and how it is credited at the end. Many of these lines already sit on your sales quote, so carry them over.
Spell out what happens if someone cancels.
Give a notice period and say who keeps what. Colt's page asked for two weeks' written notice, with the deposit kept if the buyer cancelled late. Payment timing belongs here too. For more on that, see how to get customers to pay on time.
Read it aloud together before anyone signs.
Go line by line with the customer. If either of you is unsure about a line, rewrite it on the spot. Then collect both signatures and hand each party its own copy. File yours right next to the job on your calendar, so the paper and the booking never get separated.
Keep the handshake, and promise only what you can deliver.
The page does not replace the relationship. It protects it. Make sure nothing on it promises more than you can actually deliver, which is how overselling starts. This is general information, not legal advice, so have a lawyer review your agreements.

Dr. Paul's Insight

The most common mistake is trusting a conversation to hold a deal that matters. Two honest people can walk away from the same talk with different memories, and the gap shows up on the worst possible day. In Dr. Paul's view, a handshake shows you meant it, and the written page keeps track of what you meant. Rules vary by location and type of business, so a lawyer should look over your agreement.

Sample: The One-Page Sales Agreement

Here is the page Lenora drafted for Colt, rewritten as a checklist you can adapt. Each line answers one question both sides should agree on before anyone signs.

Seller: Forest Trails and ToursBuyer: Ferry company tour desk

What	Coast-bus tour seats
How many	Thirty seats a week, written in words and in numbers
Buy or offer	Bought outright, whether the buses fill or not
When	The ten weeks of autumn, with start and end dates
How much	Three coins per seat
Deposit	One coin per seat for weeks one through four (120 coins), held by the seller and credited to the final payment
If someone cancels	Two weeks' written notice. Buyer cancels late: seller keeps the deposit. Seller cancels late: deposit returned plus a week of seats credited.
Signatures	Both sides sign, and each keeps a copy

Illustration from the book. This is general information, not legal advice. Have a lawyer review your own agreement.

From the Book

Read a Passage From Chapter 15

Chapter 15 · The Sales Agreement

Forty Seats, No Paper: A Horse’s Handshake

Lenora did not take the note. She folded her hands.

“Who shook?” she said.

“I did. And the tour desk.”

“Which creature?”

“The clerk. The gull. The one at the desk by the ferry, with the visor.” Colt flung out a foreleg. “He said done!”

“On what?”

“On forty seats. A week.”

“From when?”

“From the first. Of the autumn.” Colt hesitated. “The first week of the autumn.”

“Until when?”

“Well, the autumn!”

“What was the price per seat?”

There was a silence. Colt turned to Greta.

Read how Colt and the tour desk finally agree on a number in Sales for Small Businesses, Book 5 of Dr. Paul's Fabled Forest Business School Series.

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