The invention of money was one of the greatest developments in the field of trade and commerce. This enabled mankind to mass produce goods and be assured of returns that can be stored and used to procure any resource on the face of the earth. It is buying and selling using which helps humans transcend geographic limitations and make fortunes through the economic principles of supply and demand.
Goods are resources of definite economic value based on a number of factors. The worth of a commodity is affected by the cost of raw materials, labour, land/building, taxes, demand, supply, among others. As goods are costly and involve costs in production, they are manufactured only according to perceived demand, as many goods are perishable and can be a loss if produced more than required. There is also a concern of statutory requirements where an item would be deemed to be perished after the legal date of expiry- whether it is actually spoiled or not.
Hence, it is all the more important to match demand with supply and thereby reduce wastages and ensuring good prices for the produced goods.
Services: The emergence of Service Sector with a bang has resulted in services being bought and sold just like tangible goods. There exists a huge market for services which are gaining ground and proving to be extremely lucrative. This has resulted in the creation of service agreements in the nature of buying and selling with definite descriptions of quality and grade.
What Are Buying And Selling Agreements?
Buying and Selling agreements are legally valid documents to buy or to sell any identifiable goods or services of specified quantities at specified rates, date and time. The agreement may be either (i) An agreement to buy or (ii) An agreement to sell The differences between them are very negligible since one person’s purchase is another person’s sale. Thus, the distinguishing factors are mostly the degrees of responsibilities on either the seller or buyer. The above differences apply to sale transactions that are to take place in future and where the rights and liabilities shall be transferred later.
The differences between them are very negligible since one person’s purchase is another person’s sale. Thus, the distinguishing factors are mostly the degrees of responsibilities on either the seller or buyer. The above differences apply to sale transactions that are to take place in future and where the rights and liabilities shall be transferred later. An agreement where the transfer of rights takes place immediately is called a contract of sale/ Deed of sale.
The matter of sale may be either goods or services. Let us discuss briefly some agreements that may be qualified as buying and selling agreements.
Agreement For Sale Of Goods
An Agreement for sale of goods is created when a prospective buyer approaches a seller in order to procure any quantities of a product and the seller agrees to sell the same. The agreement mentions the description of both the parties including full names, addresses and whether incorporated or not.
Then they go on to mention the reason for the agreement and the crux of the deal which happens to be the description of the goods. Both the quantity and rate shall be clearly written along with the total consideration involved in the deal. Then comes the terms and conditions, some of them include the clear description of the goods with the grade, method of delivery, payment methods, credit cycles if any, currencies in which payment shall be done; insurance details, obtaining of bills of lading/letter of credit/contract of freightment as applicable for international export, tax liabilities, dispute resolution: whether arbitration or litigation along with jurisdiction; rejection if quality is not maintained, and all other responsibilities of buyer and seller
Agreement For Purchase Of Goods
An Agreement for purchase, on the other hand, refers to a document where a buyer: Either an individual or an organisation agrees to purchase specified quantities of goods from a seller who can be either a manufacturer or trader of the nature of wholesaler or retailer. The purpose of such agreements is usually to book the products from being sold to other buyers. It would also be an advantage to book products that suffer from price fluctuations due to market forces. Therefore, it would be a wise decision from a buyer to create an agreement to purchase to overcome uncertainties in the market which may be related to supply and price. The seller would also be in an obligation to sell at the previously agreed price and quality if they create an agreement at the time when prices are down. Anyway, the risk levels would be less for both parties in such agreements. An Agreement to purchase contains terms as to the quality, grade, pricing: whether existing or future prices, Earnest money to be deposited by the purchaser, refund details, insurance details, shipping details, credit cycles; further responsibilities of buyer and seller, termination, dispute jurisdiction and legal remedies including arbitration/ litigation need to be mentioned in such an agreement
Raw Materials Supply Agreement
A Raw materials Supply Agreement is a kind of sale agreement wherein a company or other entity agrees to supply raw materials of any description to a manufacturer or any business involved in the processing of such raw material. It may also be a service industry: say restaurant chain which constantly needs raw materials for day to day running of the business. It is convenient to get a Raw Materials Supply Agreement from a recognised supplier with a prolonged nature of relationship based on trust and quality assurance. It would also be ideal to have a credit cycle in order to avoid bit by bit payments for transactions of continuous or even daily nature. Such an agreement shall primarily mention the quantity, quality, packaging and the rate of consideration along with other common aspects of a purchase agreement. Since they deal with similar products, it would be worth to mention non-competition from part of the seller for a specified term and preventing them from producing similar products for the said period. Confidentiality is also a vital component in raw materials supply agreement.
A Service Agreement is a detailed document that describes the services that are undertaken by an entity called service provider for a consideration. Service Industries have shown the way to rake in profits without making huge investments in factors of production. A service agreement essentially describes the details of the service along with exact costing and breakup of the same. For instance, a manpower supply agreement mentions the number of manpower supplied and the rate charged per unit of time. There exists a plethora of services to choose from and the terms are specific to the service. However, the basic clauses also include the date and time by which the work is to be completed, the number of manpower who shall be included in the performance of the agreement, the facilities that may be provided to them, the goals that are to be achieved and the penalties for non-compliance. As with any other sale agreement, there shall also be dispute jurisdiction mentioned along with available remedies to the aggrieved parties and ways to terminate the agreement.
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