Types of sales contracts and how AI contract review can help

Sales contracts are the engine of commerce, yet reviewing them can often be a drag on productivity and a source of risks, especially in complex transactions. 

Whether you deal with routine purchase orders, scopes of work (SOW), Software-as-a-Service (SaaS), Data Processing Addendums (DPAs), Master Service Agreements (MSAs), or service-level agreements on a day-to-day basis, every type of sales contract demands speedy analysis with keen attention to detail to ensure it is legally sound.

In this post, we explore the common types of sales contracts that businesses routinely use and demonstrate how modern AI-powered contract review platforms, like DocJuris, can help businesses accelerate deals while minimizing errors and deriving deep insights from their sales agreements.

Main takeaways from this article:

• Understanding the different types of sales contracts, like MSAs and SOWs, is crucial for effective deal management, whether for recurring sales or one-off engagements.
• Key aspects in a sales contract, such as the delivery terms and approval process, define the obligations and expectations of both the buyer and the seller.
• Traditional methods of reviewing sales contracts can be time-intensive and error-prone. AI-powered contract review offers solutions to expedite the review process and mitigate potential disputes.
• AI-enabled platforms like DocJuris can transform contract workflows, providing enhanced legal protection.

What is a sales contract?

A sales contract is a legally binding document between two parties that defines the terms and conditions for exchanging goods or services. It establishes the rights and obligations of both the seller/vendor and the buyer, providing a legal framework for the transaction that safeguards both parties. A sales contract's clarity and detailed description are vital in preventing misunderstandings and ensuring a smooth business relationship, built upon mutual consent.

Common types of sales contracts

Businesses use a variety of sales contracts depending on the nature of their offerings and the specifics of each transaction. Here are some of the most common types:

1. Purchase agreements

A purchase agreement is used where a buyer purchases, and a seller agrees to sell, specific goods or services. These are often used for one-time transactions or when the scope of delivery is clearly defined. They typically include details such as quantity, the purchase price or sales price, delivery schedule, and payment method and terms.

2. Master Service Agreements (MSAs)

MSAs establish the overarching terms that govern multiple projects over time. They set the general legal framework, covering confidentiality, intellectual property rights, liability limits, and dispute resolution. Subsequent Statements of Work (SOWs) or order forms are created under this umbrella agreement.

3. Statements of Work (SOWs)

These documents outline the specific details of a project or service being provided. They typically include the scope of work, deliverables, timelines, milestones, and acceptance criteria. SOWs often operate under an existing MSA.

4. Data Processing Addendums (DPAs)

DPAs are contractual attachments required under data protection laws like GDPR and CCPA, outlining how personal data is processed, stored, and shared. They are especially important in tech and cloud contracts where one party accesses sensitive customer or employee data. InfoSec teams often review DPAs to assess risks related to AI usage, storage, and data retention. As AI becomes more integrated into workflows, DPAs help ensure legal and security teams have guardrails in place for compliant data handling.

5. Purchase Order (PO) forms

These are often shorter, standardized documents used for placing orders for goods or services under pre-existing terms, sometimes referenced in an MSA or a terms of service agreement. They typically include details like specific products or services, quantities, and pricing.

6. Renewal agreements and upsell agreements

These agreements govern the extension of existing relationships or introduce additional products/services. They usually mirror original agreements but may include updated terms or pricing. Proper contract review ensures continued compliance and risk management.

7. Terms of service

Commonly used for software-as-a-service (SaaS) or online platforms, these contracts outline the rules and regulations that users must agree to in order to use the service. They cover aspects like acceptable use, intellectual property, and liability limitations. Often, the seller/vendor expressly disclaims certain responsibilities within these terms and leaves the obligation on the buyer.

Essential elements of a sales contract

Each sales contract, regardless of its type, should contain the following crucial elements to be legally valid:

Parties involved

The contract must clearly state the identity of all parties entering into the agreement, including their legal names and addresses, confirming their legal capacity to enter into such an agreement. This establishes who is bound by the terms of the contract.

Description of goods or services

Every sales contract should clearly describe the goods being sold or the services being provided. A detailed description minimizes confusion and ensures both parties understand exactly what is being exchanged. 

Payment details and payment terms

The contract must define the total price, currency, payment schedule, accepted payment methods, and any relevant financial terms. Precise payment details help prevent billing issues or misunderstandings.

Delivery terms

For the sale of goods, the contract should outline the delivery schedule, location, responsibility for shipping costs, and risk of loss during transit. For services, the location and timeline for service delivery might be specified. In real estate transactions, the closing date, when the buyer takes possession of the property, is a crucial element.

Approval process

If internal policies or complexity warrant it, the contract may outline a required approval process, such as sign-offs from legal, finance, or executive stakeholders, before the contract becomes effective.

Dispute resolution

The contract should include a clause outlining the process for resolving any disagreements that may arise, such as negotiation, mediation, or arbitration (a private, legally binding process where a neutral third party makes a final decision). This provides a framework for addressing conflicts, including labor disputes.

Applicable warranties

The contract should clearly state any warranties provided by the seller, or if the seller expressly disclaims any implied warranty or specific guarantees related to quality assurance.

Force majeure

This clause addresses unforeseen events (e.g., natural disasters, political instability) that could prevent either party from meeting their contractual obligations.

Why reviewing sales contracts is time-consuming

Reviewing sales contracts can take up a lot of time, slowing down deals due to:

• Lack of standardization across templates or teams: Different departments or even individuals within the same organization may use varying contract templates or have their preferred language, which makes it difficult to quickly assess deviations and ensure compliance.
• Complexity of clauses in MSAs and DPAs: These agreements often contain intricate legal clauses regarding liability, indemnification, data privacy, and service levels. Understanding and negotiating these clauses requires significant time and professional advice.
• Manual redlining and versioning slow down deal velocity: Reviewing contracts manually means tracking changes through multiple email exchanges and document versions. This process is prone to errors and can significantly delay the negotiation cycle.
• Risk of missed terms in “fast” documents like order forms: These  documents are often brief transactional agreements that teams are tempted to skim quickly due to time pressure or perceived simplicity. But even these can contain critical clauses or non-standard terms that, if overlooked, can create compliance or financial risk later on.
• Legal bottlenecks, especially for small teams handling high-volume requests: Legal teams with limited resources are often overwhelmed with contract review requests from various departments, which can slow down the sales process, or make a sales team go in a different direction if they don't have legal buy-in. Tools like DocJuris’s AI Contract Email Agent help sales teams triage contracts under $10K (or $100K+ depending on policy), providing fast, first-pass insights without immediate legal escalation.

How AI contract review simplifies the sales contract process

Given these challenges, AI-driven contract review platforms transform how organizations handle sales agreements. These tools leverage machine learning algorithms to analyze and interpret contractual language rapidly, reducing manual effort and increasing accuracy. Key features include::

Automated clause screening

AI can be trained to identify specific clauses within a contract and compare them against a library of approved language or highlight deviations from standard templates. Screening reports, a core feature in DocJuris, allow teams to run a 30-second contract analysis that flags non-standard clauses, missing provisions, and key risks. 

Whether reviewing MSAs, DPAs, or short-form agreements like purchase orders, AI-driven clause screening compares contract language against pre-approved templates and playbooks—ensuring nothing critical slips through. These tools act as a digital safety net, helping sales, procurement, and legal stay aligned without slowing down the deal.

AI-powered playbooks

These intelligent guidelines embed pre-approved fallback language for various contractual terms, such as indemnity, liability caps, and payment terms. Playbooks empower business users to conduct initial reviews with greater confidence, without legal team involvement, knowing they have access to standardized alternatives for negotiation with the other party.

One-click redlining

Advanced AI tools like DocJuris enable users to upload encrypted PDFs or Word contracts into the platform and apply edits and suggest changes with a single click. This process happens entirely within the DocJuris environment—where documents are restructured for clarity, reviewed, and then re-exported back into Word with formatting and markups preserved. By centralizing edits, DocJuris eliminates the version control issues and formatting inconsistencies that come with jumping between tools—streamlining negotiation while maintaining control over the review process.

Workflow efficiency

AI-driven platforms like DocJuris automatically route contracts based on type, value, or required review, getting the right people involved at the right time. Real-time collaboration and cloud-based commenting give teams full visibility into where a contract stands and where it may be stalled. This transparency helps sales and legal teams work in sync, speeding up approvals and reducing back-and-forth (based on knowing which version has been updated).

Bring speed, clarity, and control to your sales contracting process with DocJuris

AI contract review tools streamline the contracting process by automating routine analysis, reducing review times, mitigating risks, and supporting faster deal closures. For organizations seeking to modernize their sales contracting workflows, DocJuris offers robust capabilities to bring clarity, precision, and control to every agreement - to help you win deals faster and keep momentum going.

The platform enables organizations to manage sales contracts more effectively. Its deep and native integration with Microsoft 365 allows seamless collaboration, while features such as automated clause screening, automated redlines, and dynamic clause libraries streamline the review process. Visual tools like negotiation heatmaps help teams quickly spot red flags or which party assumes contract risk and obligations, ensuring contracts stay compliant and on track.

Ready to see for yourself how this technology can adapt to your specific contracting environment and help your team close deals faster?

Request a demo today.

FAQs

What are the limitations of a sales agreement?

A sales agreement is a comprehensive contract, but it may still be limited by its scope and governing law. A sales contract can only bind the parties who have signed it and typically addresses the specific transaction outlined within its terms. External factors or unforeseen events not covered in the agreement may fall outside its purview. Sometimes, certain clauses may be deemed unenforceable under applicable laws.

Is a sales agreement a legally binding contract?

Yes, a sales agreement is a legally binding agreement if it includes an offer, acceptance, and consideration (something of value exchanged) and clearly states the parties' intention to enter into a business relationship. The specific requirements for enforceability can vary depending on the relevant laws of the jurisdiction.