Contract of sale

A contract of sale is a legal contract an exchange of goods, services or property to be exchanged from seller (or vendor) to buyer (or purchaser) for an agreed upon value in money (or money equivalent) paid or the promise to pay same. It is a specific type of legal contract.

An obvious ancient practice of exchange, in many common-law jurisdictions it is now governed by statutory law. See commercial law.

Contracts for sale involving goods are governed by Article 2 of the Uniform Commercial Code in most United States and Canadian jurisdictions, however in Quebec such contracts are governed by the Civil Code of Quebec as a nominate contract in the book on the law of obligations.

Formal contract by which a seller agrees to sell and a buyer agrees to buy, under certain terms and conditions spelled out in writing in the document signed by both parties. An invoice, for example, is a contract of sale. Also called agreement of sale, contract for sale, sale agreement, or sale contract.

A sale contract is a written agreement between a buyer and seller of real estate, setting forth the terms of the sale, and specifying the rights and duties of the parties in the real estate transaction. It will be signed by the buyer and seller and their witnesses and will become legally binding upon each party.

Example

Owner A wishes to sell property to Buyer B. After agreeing on a price, closing date, and other terms of the sale, Owner A’s attorney prepares a sale contract. It is reviewed and signed by Owner A and Buyer B. The parties are now legally bound by the terms of the contract and it will govern the sale transaction.

A sale contract is the basis of the real estate transaction, it is in large part the “law” the parties agree to bind themselves to. In the event of a dispute in the future, the terms of the real estate will control and define the dispute.

TERMS OF A SALE CONTRACT

Real estate transactions can be complex, with a number of things to consider. The sale contract will obviously set forth the purchase price but it will also contain many other provisions. Some of these provisions that are commonly found in a sale contract are:

The names and addresses of the parties; The address and legal description of the property; The date the contract will “close” or be finalized; The date financing, inspection and other conditions of sale must be completed; Whether the buyer will be able to cancel the contract if financing is denied; The amount to be paid at the execution of the contract; The type of inspections to be performed, the time in which they will be performed, and who

will pay for the inspection; Whether the property is being sold in its present condition or whether repairs will be made; The time and method in which the seller will demonstrate good title to the property; The payment of commissions to real estate agents and other third parties;

A sale contract for real estate may contain many terms and clauses that are often not understood by a person not experienced in real estate transactions. Because the parties have legally bound themselves to the document, and are subject to being sued if they do not perform their obligations, it is usually recommended that both parties seek the advice of an attorney experienced in real estate law, especially in the case of a private sale.

When arranging a mortgage for you, we will require a copy of the sale contract pertaining to your real estate transaction. In addition to the advice given to your Realtor and lawyer, we can offer our expertise in regards to the portion of the contract that addresses mortgage financing.

Auction

Common name for several types of sales where the price is neither set nor arrived at by negotiation, but is discovered through the process of competitive and open bidding. The two major types of auction are (1) Forward auction in which several buyers bid for one seller's good(s) and (2) Reverse auction in which several sellers bid for one buyer's order. An auction is complete (and a binding contract is created) when a bid is accepted by the seller or the buyer (as the case may be). The internet age has transformed auction into a truly open process in which thousands of goods (from books to ships) and services (from air travel to legal advice) may be offered for bidding by anyone from anywhere and at any time on websites such as eBay.com. Internet auctions are an important aspect of electronic commerce.

I mentioned that auctioneers enter into contracts throughout their careers. Here, we explore the three basic types of auction contracts.

I’ll talk about these three contracts in the sequence in which they normally occur. These three contracts always involve two of the four parties: auctioneer, seller, bidder and buyer.1. The “Right to sell at auction” or “Consignment” Contract: This contract is between the

auctioneer and seller. It is normally in writing (should always be in writing). This contract engages the auctioneer to provide certain services, typically including marketing, advertising, inventory, arrangement, bid calling and settlement. It requires the seller to provide certain promises as well, including allowing the property to be sold, providing clear title, etc.

2. The “Registration” Contract: This contract is between the auctioneer and the bidders. It typically involves allowing the bidders to participate, and confirming that they agree to the terms and conditions, such as necessary deposits, time of removal, closing date, etc. if they become a buyer. The auctioneer (on behalf of the seller) agrees to allow the bidders to participate and provide the property to the winning bidders on behalf of the seller. These types of contracts are often times only oral, but can be in writing.

3. The “Bid calling” Contract: I discussed bid calling contracts in depth in my post: http://mikebrandlyauctioneer.wordpress.com/2009/11/21/does-bid-calling-form-contracts/. When auctioneers bid call, they enter into, typically, oral contracts with the high bidder(s) and then, finally upon “Sold!” they enter into a different contract with the ultimate high bidder — the buyer. These contracts are actually between the seller and the high bidder, and then seller and buyer; the auctioneer acts as an agent for the seller. Most often, bid calling contracts are oral, but then can be reduced to writing following, “Sold!”

* It is important to note that at an absolute auction, the seller, upon the opening of the auction, enters into a collateral contract with all the bidders, agreeing to sell to the highest bidder.

In regard to enforceability, oral contracts (not in writing) are almost always fully enforceable in court, although they lack the written documentation to make enforceability easier. The one exception is contracts for the purchase of real estate, which must be in writing to be enforceable per the Statute of Frauds. So, following, “Sold!” at a real estate auction, there is a contract

between the buyer and seller, but not an enforceable one — that is, not until it is reduced to writing.

Installment purchase

DefinitionA system by which a buyer pays for a thing in regular installments while enjoying the use of it.During the repayment period, ownership (title) of the item does not pass to the buyer. Upon the full payment of the loan, the title passes to the buyer. Installment buying is a social innovation that expands the economy with additional income. Cyrus McCormack (1809-84, one of the inventors of the harvesting machine) pioneered it in the early 19th century US, and Issac Singer (1811-75, one of the inventors of the sewing machine) made it a common practice. The UK term is hire purchase.

Installment buying is a type of loan or credit buying in which the buyer agrees to make regularly scheduled installment payments to the seller. Depending on the terms of the purchase agreement, the buyer may or may not be required to provide the seller with any type of down payment on the front end. There are several different types of installment buying, including the use of layaway plans, in-house financing on furniture, and even buying cars or homes.The basic approach to installment buying involves a seller agreeing to enter into a transaction with a buyer that does not require the entire purchase price to be paid up front. Instead, the amount owed, plus any applicable interest, is divided into a series of payments that the buyer agrees to remit on a regular basis, usually monthly. Depending on the terms of the purchase

agreement, the buyer is then granted possession of the product purchased and is free to use it as he or she wishes. In the event that the buyer should default on the installment buying plan, the seller may take action to repossess the product as a means of partially recouping losses from the transaction.

One notable exception is that with layaways, consumers normally do not take possession of the purchased products until the debt is retired in full. At one time, this approach was often used to finance the purchase of major appliances for the home as well as securing goods for use as holiday gifts. Once the terms of the installment plan were fulfilled, the store would release the purchased goods to the buyer, and arrange delivery if necessary. While the use of credit cards to purchase goods is a more common approach today, this form of installment buying is still offered by a limited number of large retail chains, and is sometimes provided by locally owned stores and shops.The purchase of a vehicle is one of the most common examples of installment buying today. With this strategy, a qualified buyer is extended financing for the purchase. Interest is applied to the principal of the loan and the total is divided into a series of monthly installment payments. Once all the payments are remitted, the lender relinquishes any claim on thecollateral used for the loan and the owner has sole possession of the vehicle.A mortgage is also a form of installment buying. Typically, the lender requires that the buyer make a deposit or down payment on the property that is being purchased. The remainder of the balance due is financed and a series of monthly installments are paid until the debt is settled in full. With installment buying of this type, the lender may extend a fixed or variable rate of interest on the total balance of the loan. Debtors may sometimes refinance a loan of this type when interest rates fall below the current rate applied to the loan, making it possible to lower the amount of the monthly installment payments.