What is a sales agreement? Explanation and use

What is a sales agreement? It is the agreement whereby the seller undertakes to deliver an item and the buyer to pay a price in money for it (Article 7:1 of the Dutch Civil Code). In fact, it is the same agreement as a purchase agreement, only viewed from the seller's perspective. The document specifies what is being sold, at what price, when delivery takes place, and who bears which risk. For SME entrepreneurs, it is the framework document for the sale of movable property such as machinery, inventory, vehicle fleets, or business assets.

The short answer

• Definition: a reciprocal agreement whereby the seller delivers and the buyer pays the price (Article 7:1 of the Dutch Civil Code).
• Subject: usually movable property, but also property rights (Article 7:47 of the Dutch Civil Code).
• Core: object, price, delivery, transfer of risk and guarantees.
• Form: no specific format, but recording it in writing prevents evidentiary problems.
• Difference from consumer sales: mandatory protection rules apply to sales to a consumer (Article 7:5 et seq. of the Dutch Civil Code).

What exactly is a sales agreement from a legal perspective?

Legally, purchase is regulated in Title 7.1 of the Dutch Civil Code. Article 7:1 of the Civil Code defines purchase as the agreement whereby one party undertakes to give an item and the other to pay a price in money for it. A sales agreement is therefore not a separate type of contract, but the same agreement from the seller's perspective. Strictly speaking, anyone who sends an invoice with delivery terms is already concluding a purchase, but a written sales agreement records the agreements more fully.

In principle, the agreement is not subject to any formal requirements. A verbal agreement is legally valid, but in the event of a dispute, you must be able to prove what was agreed upon. Therefore, entrepreneurs record sales in writing, especially for larger amounts or complex deliveries.

Movable property and property rights

The generic sales agreement usually pertains to movable property: tangible, transportable goods. Examples include a used delivery van, a batch of commercial stock, office furniture, or production machinery. Separate rules apply to the sale of real estate, and often a notarial deed is required, so that falls outside the scope of this agreement.

In addition to tangible goods, a purchase can also relate to property rights (Article 7:47 of the Dutch Civil Code). Examples include a claim, a share, or a domain name. The terms of the purchase then apply as much as possible accordingly, insofar as this is consistent with the nature of the right. For specific objects such as copyright or a domain name, additional requirements apply, which you set out in a specific agreement.

The key agreements in a sales agreement

• Parties: seller and buyer, with Chamber of Commerce numbers and authority of representation.
• Object: an accurate description of what is being sold, including condition and any accessories.
• Price: amount, VAT treatment and payment term.
• Delivery: place, time and manner of delivery (Article 7:9 of the Dutch Civil Code).
• Transfer of risk: from when does the buyer bear the risk of loss or damage (Article 7:10 of the Dutch Civil Code).
• Conformity and warranty: the item must conform to the agreement (Article 7:17 of the Dutch Civil Code).
• Retention of title: the seller remains the owner until full payment (Article 3:92 of the Dutch Civil Code).

Delivery, risk and conformity

In practice, three points most frequently lead to disputes. First, delivery: Article 7:9 of the Dutch Civil Code obliges the seller to transfer ownership of the item and its accessories and to deliver it. Second, the transfer of risk: pursuant to Article 7:10 of the Dutch Civil Code, the risk passes to the buyer upon delivery, unless otherwise agreed. Anyone delivering remotely would be well advised to regulate this explicitly.

Thirdly, conformity. Article 7:17 of the Dutch Civil Code stipulates that the delivered item must conform to the agreement: it must possess the characteristics that the buyer could reasonably expect. If the item does not conform to this, there is non-conformity, and the buyer may claim repair, replacement, a price reduction, or rescission. Note the duty to complain under Article 7:23 of the Dutch Civil Code: the buyer must complain within a reasonable time after discovery, otherwise his reliance on the defect lapses.

Business purchase versus consumer purchase

If you sell to another company, a large degree of contractual freedom applies. You may limit warranties, cap liability, and deviate from statutory regulations, provided that the agreements are not unreasonably burdensome. If you sell to a consumer, the consumer purchase regulations of Article 7:5 of the Dutch Civil Code and subsequent articles apply. These rules are largely mandatory: you cannot contract away the consumer's statutory rights to their detriment.

A small example. An installation company sells a used aerial work platform to a fellow company for 18,000 euros. In the sales agreement, they stipulate that the machine is sold “as is,” that the risk transfers upon collection, and that ownership only transfers after full payment. Because it is a business purchase, that “as is” agreement holds up. With a consumer, the same clause would have much less scope.

Honest recommendation

For a simple sale of standard goods between entrepreneurs, you often do not need a lawyer. A clear written agreement regarding the object, price, delivery, transfer of risk, and retention of title suffices, and the law completes the rest. Simply put it in writing and have both parties sign.

Do seek assistance for large amounts, special objects, payment in installments, delivery abroad, or when you wish to specifically limit warranties and liability. In such cases, a clear description and proper risk allocation carry significant weight. If you have doubts about the structure, have the contract reviewed before signing.

Want to know more or need a document immediately? View the sales agreement, read how to drafting a sales agreement , and what it costs to have a sales agreement drawn up.

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