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Sales Contract
"I need a sales contract for a transaction involving 500 units of product X, with delivery within 30 days, payment terms of net 60, and a 5% discount for early payment."
What is a Sales Contract?
A Sales Contract is a legally binding agreement where one party agrees to transfer ownership of goods or property to another party in exchange for payment. In the Philippines, these contracts are governed by the Civil Code and must clearly state the price, payment terms, and detailed description of what's being sold.
Beyond just documenting a sale, these contracts protect both buyers and sellers by spelling out key details like delivery dates, warranties, and what happens if something goes wrong. Filipino businesses commonly use them for major purchases, real estate deals, and business-to-business transactions where having clear, written terms is essential for avoiding disputes.
When should you use a Sales Contract?
Use a Sales Contract any time you're making a significant purchase or sale in the Philippines, especially for transactions above ₱50,000. This document becomes essential when buying or selling vehicles, equipment, bulk inventory, or real estate – situations where verbal agreements aren't enough to protect your interests.
A written Sales Contract is particularly important when dealing with installment payments, customized orders, or transactions involving multiple delivery dates. Filipino law requires these contracts for real estate sales and strongly recommends them for major business deals to prevent misunderstandings about warranties, delivery terms, and payment schedules.
What are the different types of Sales Contract?
- Deed Of Sale Form: Standard template for basic property transfers, commonly used for small-scale transactions and personal sales
- Absolute Deed Of Sale Of Motor Vehicle: Specialized format required by LTO for vehicle ownership transfers
- Deed Of Sale Of A Portion Of Land: Specific format for partial land transfers, including technical descriptions and survey details
- Sales Agent Contract: Agreement between companies and sales representatives, outlining commission structures and targets
- Lease To Purchase Contract: Combines rental agreement with future purchase option, popular in real estate and equipment deals
Who should typically use a Sales Contract?
- Business Owners: Small to large enterprises use Sales Contracts when selling goods, equipment, or services to protect their interests and clarify terms
- Real Estate Developers: Rely on these contracts for property sales, often working with lawyers to ensure compliance with Philippine property laws
- Corporate Legal Teams: Draft and review Sales Contracts to protect company interests and ensure regulatory compliance
- Individual Sellers: Use basic Sales Contracts for significant personal transactions like vehicle or property sales
- Notary Publics: Authenticate Sales Contracts to make them publicly binding, especially for high-value transactions
How do you write a Sales Contract?
- Basic Details: Gather complete names, addresses, and tax identification numbers of all parties involved in the sale
- Item Description: Document detailed specifications, conditions, and serial numbers of goods or property being sold
- Payment Terms: Define price, payment schedule, and acceptable payment methods under Philippine banking regulations
- Delivery Details: Specify timeline, location, and responsibility for transportation or transfer costs
- Special Conditions: List warranties, return policies, or specific requirements unique to your transaction
- Supporting Documents: Prepare proof of ownership, permits, or certificates required for the sale
What should be included in a Sales Contract?
- Parties: Full legal names and addresses of buyer and seller, with their respective tax identification numbers
- Subject Matter: Clear description of goods or property being sold, including specifications and condition
- Consideration: Exact purchase price, payment terms, and schedule in Philippine Peso
- Delivery Terms: Transfer method, timeline, and location for goods or property handover
- Warranties: Guarantees about product quality, condition, or title as required by Philippine Civil Code
- Default Provisions: Consequences for breach of contract and remedies available to each party
- Signatures: Space for parties' signatures, with notarization requirements for high-value transactions
What's the difference between a Sales Contract and a Contract to Sell?
A Sales Contract differs significantly from a Contract to Sell, though they're often confused in Philippine property transactions. While both involve transferring ownership, their timing and legal effects are quite different.
- Transfer of Ownership: A Sales Contract transfers ownership immediately upon signing, while a Contract to Sell only promises future transfer after full payment
- Legal Protection: Sales Contracts give buyers immediate ownership rights, but Contract to Sell protects sellers by keeping title until payment completion
- Payment Terms: Sales Contracts typically involve immediate or short-term payment, while Contract to Sell usually involves installment payments
- Default Remedies: In Sales Contracts, buyers can demand delivery after payment; in Contract to Sell, sellers can cancel the agreement if buyers default on payments
- Registration Requirements: Sales Contracts for real estate must be registered immediately, while Contract to Sell registration is optional until final payment
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