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Equipment Sales Agreement

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Equipment Sales Agreement

An equipment sales agreement is a form of purchase agreement revolving around the transaction of equipment. The purchase of equipment requires a substantial capital investment, for which some businesses may even have to take an equipment loan. As a result, buyers and sellers both experience a slight form of mistrust while transacting. Buyers are afraid that this vast sum may go down the drain if the equipment fails to perform as per specifications. On the other hand, sellers are often concerned about receiving their payments on time. 

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An equipment sales agreement is the best way to safeguard the interests of either party. As a result, one can expect a fair and transparent exchange of cost and commodity during the purchase.

Parts of an equipment sales agreement

To create a professional, legally binding, equipment sales agreement, ensure that the document contains the following elements:

1. Names of the buyer and seller

For any agreement to be deemed valid, it must include the official names of the buyer and the seller. If in your equipment sales agreement, the concerned parties are companies, then it should contain the registered name, address, tax information numbers, and other identifiers.

2. Terms of agreement

One of the key highlights of an equipment sales agreement is that the seller agrees to transfer all the rights and the title of the equipment to the buyer after the full and final payment of the equipment's cost. If you are selling several pieces of equipment, you can specify the terms of agreement separately.

3. Delivery and acceptance

This clause of the equipment sales agreement highlights the condition of the equipment, as certified by the seller. The equipment could be brand new, refurbished, or second-hand, and accordingly, it must be mentioned here.

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4. Payments

The most vital part of an equipment sales agreement, this section contains details pertaining to the amount that needs to be paid for the equipment, the mode of payment, and the type of payment. It may also stipulate the time duration within which the buyer has to settle the payment.

This clause plays a significant role in case the buyer wishes to make payments in installments. With this consideration, you can break down the payments in equal installments and map it to a timeframe. The equipment sales agreement must also contain the date on which the monthly payment needs to be made.

5. Repair and maintenance

Typically, buyers are responsible for the repair and maintenance of the equipment after the purchase. However, certain sellers offer facility management services that offer to carry out repair and maintenance of the equipment for a mutually agreed-upon fee.

6. "As-is" condition

he "as is" condition states that the buyer is getting exactly what they have seen, liked, and booked. It also contains a clause that protects the seller from any liabilities if the equipment is damaged or stolen during operation. In such a case, the buyer will continue paying the installments. Basically, it shifts the responsibility onto the purchaser for operating, maintaining, and purchasing the equipment.

7. Default status

If the buyer decides to make the purchase through installments, the 'Default Status' of the equipment sales agreement highlights the fine for late payments, collateral for non-payment, and other such conditions.

8. Final settlement

The final settlement talks about the closure of the contract once all the dues have been settled. It is computed through the summation of equipment costs, taxes, licensing fees, delivery charges, etc. After the final settlement, no more issues regarding the purchase of equipment shall be entertained. 

Whether you are a buyer or a seller, an equipment sales agreement is a must to lay the foundation of a healthy professional relationship. You can make use of Bonsai's equipment sales agreement template to protect your best interests!

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