When are written contracts legally required for private sales transactions?
In most states, a written agreement or contract is only required for a few types of private sales transactions. These typically include:
For example, for any sale of goods with a price tag of $500 or more, a law known as the statute of frauds may apply. This requires that most sales over $500 be documented between the seller and the buyer and signed by each party. If the sale is not documented, then it may not be enforceable. There are several exceptions, but without a signed written agreement, it can be unclear what was agreed to. Even when not required, however, making a Purchase Agreement can ensure that a buyer agrees to your terms for the sale.
For businesses, there may be more requirements if a private sales transaction is really a commercial transaction. This may be a complicated distinction, especially with home-based businesses and hobbyists. Generally, a transaction is commercial, rather than private, if the person or business doing the selling makes it their business to sell what they are selling through their business. For example, a shoe salesperson selling shoes may be engaged in a commercial transaction, while that same salesperson would be engaged in a private transaction if they sold their personal car. Business owners may want to ask a lawyer before selling business assets, or using their business to sell personal property.
Does the buyer or seller prepare the Purchase Agreement?
Either the buyer or the seller can prepare a Purchase Agreement. Regardless, both buyer and seller may want to read and understand the terms. Depending on the transaction, the buyer and seller may want to use a standard agreement. If the sale is more complicated, the parties may negotiate the terms, such as provisions for delivery of the goods, methods of payment, and remedies in case things go wrong.
Do online sales through an app automatically come with a contract?
If you sell or buy products online through an app or platform, they likely have rules for users, such as terms of conditions, and rules for transactions between sellers and buyers. Both sellers and buyers agree to a platform's rules when they use it. As a seller, you may be able to protect yourself further with your own documents. Selling through a website that is more like an online classifieds, however, means you may be required to make your own sales documents.
For example, you can include a Bill of Sale with each purchase, giving you and your buyer a record of the sale. You can also include Online Terms and Conditions, further outlining your policies, especially on methods of payment, shipping, returns, refunds, and exchanges.
Can an email be a contract?
If the buyer and seller agree to terms via email but do not physically sign anything, it can still be considered a written contract. It may need to be very clear from the email that the buyer and seller have agreed to a deal for an email to be considered a contract. Having that email printed and signed, or copied into a separate document and electronically signed can remove any doubt that an email is a contract.
What happens if a buyer or seller backs out after agreeing to terms via email or text message?
If a buyer or seller backs out after agreeing to terms via email or text message, the other party may be able to take legal action. Depending on the circumstances, however, your legal remedies may be limited, if any exist at all. Typically, after an agreement has been reached, if a buyer or seller does something to make good on that agreement, such as deliver the goods or pay the agreed upon price, then the receiver may be on the hook, legally, for upholding their end of the bargain, or refunding the money or returning the goods.
Before you take any legal action in these cases, you may want to talk to a lawyer to evaluate the case, as well as the benefits and costs.
Is a receipt evidence of a contract?
A signed receipt and a signed Purchase Agreement are not the same things. Legally, a receipt is proof that a sale happened. It does not replace a contract. A receipt may simply be a written acknowledgement that the seller has given the buyer the item and the amount that the buyer paid for the item.
But if there is a dispute between the buyer and seller, the receipt may prove that the item was purchased and paid for. It does not address the terms of the agreement between the seller and the buyer. That is where a contract or Purchase Agreement comes into play. Unlike businesses or retailers that may set policies for all customers, individuals may want to clearly state their terms or policies to buyers and have buyers acknowledge those.
A Bill of Sale or a Purchase Agreement, for example, includes the buyer and seller's identity and contact information, a description of the property, the purchase price, how and when payment will be made, how the goods will be delivered, and the consequences for something going wrong. Unlike a receipt, a Purchase Agreement is usually signed by both buyer and seller. While a receipt from a private sale may state some terms of the sale, since it is usually unsigned, it is not clear that the buyer agreed to the terms.
If you have legal questions about selling used or new items in person or on the internet and want to protect yourself, reach out to a Rocket Lawyer network attorney for affordable legal advice.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.