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3 Keys to a Legally Binding Car Sales Contract

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By Aditi Mukherji, JD on November 17, 2013 11:49 AM

Drafting a legal and fully enforceable car sale contract may seem like a daunting task, but it's actually more doable than you'd think.

Here are three must-have provisions in every car sale contract:

  1. Identify the parties and the product. To make your contract valid, list the buyer and seller's names and addresses. Identify the car and include a description. Be sure to include the year, make and model of the car as well as the car's Vehicle Identification Number (VIN).
  2. Specify the sales amount, offer, and acceptance. Enter the sales amount for the car. Make sure to specify that in return for the consideration amount, the seller releases the title of the car to the buyer. The seller should also hand over all legal documents that are needed to successfully transfer title to the buyer.
  3. Sign and date the contract. To seal the deal, make sure both the seller and buyer sign on the dotted line and date the contract. To play it extra safe, have witnesses present and have them sign, too.

Additional Provisions Worth Including

Sellers may want to include an "as is" clause. To do this, explicitly state that the transaction is "as is" and make clear the seller hasn't agreed to or promised any type of express or implied guarantee or warranty.

By contrast, buyers will want a cancellation period. Either way, establish terms on defects, repairs or other costs.

Leave a space on the contract to enter the number of miles on the odometer. Fill this in at the time of the sale. Include a representation and warranty that the number is accurate, to the seller's best knowledge, and hasn't been tampered with.

Remember to state the contract will end and you two will owe nothing else to each other -- commitments, covenants, promises, or otherwise -- once the sale is complete. Include a provision on returns, too.

Of course, you could take the easy way out and use a template vehicle sales contract like those found here at FindLaw. For specific guidance about whether a car sales contract's terms are legal or favorable to you, consider calling an experienced contracts attorney near you.

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