How to Review a Sales Agreement with AI: A Complete Guide

A poorly reviewed sales agreement is a financial and legal time bomb. One vague payment clause in a purchase agreement can lead to unexpected costs, disputes, and months of legal battles. Whether you're a buyer, seller, or attorney, ensuring your sales agreements contain thorough, accurate, and legally compliant language is non-negotiable.

This guide examines how AI-powered tools can enhance your sales agreement review process, making it more efficient, comprehensive, and accurate than traditional manual methods.

Why Review a Sales Agreement

A sales agreement is a legally binding document that outlines the obligations, responsibilities, and rights of parties (buyers and sellers) when exchanging goods, services, or property. Essentially, it serves as the blueprint for a secure transaction. For example, when a small business purchases new equipment from a supplier, its sales agreement outlines the purchase price, payment schedule, and warranty terms.

A buyer may not notice that an agreement contains a clause that allows a supplier to delay delivery without penalty. A thorough contract review prevents such surprises, ensuring that both parties fulfill their responsibilities.

How to Use AI to Review Sales Agreements

Legal AI platforms such as Spellbook transform tedious contract review into an efficient and more accurate process. Here’s how:

1. Upload the Agreement

The first step is to upload a sales contract to the AI platform. To minimize disruptions, select an AI tool that integrates directly with the document drafting software you already use. For example, Spellbook integrates seamlessly with Microsoft Word. You won’t need to switch between different applications when using it, and you won't experience compatibility issues.

Upload the sales agreement directly into Word, and Spellbook quickly scans and formats the document. 

Plus, Spellbook’s Associate feature supports multi-document workflows, meaning it can process bulk sales contracts for faster due diligence. You can easily update terms and fix issues across entire document sets. This is ideal for lawyers handling mergers, acquisitions, or complex transactions.

2. Identify Key Clauses

AI quickly highlights crucial contract clauses such as payment terms, delivery schedules, and warranties, ensuring they are properly stated. AI can also identify unfavorable terms, potential risks, and liabilities.

3. Check for Compliance

Regulatory compliance is a critical aspect of reviewing sales contracts. AI-powered contract review audits for compliance with relevant standards, regulations, and policies. For example, when examining an international sales agreement, AI can detect if a GDPR compliance clause is missing, which could expose the business to significant liability. It automatically suggests revised terms to reflect current standards and confirms the inclusion of all necessary provisions.

4. Analyze Risks

AI's risk detection algorithms can analyze contracts in seconds and pinpoint areas that require attention. Spellbook’s advanced system can identify ambiguous contract terms, hidden fees, and high-risk liabilities that could harm either party.

Let’s say a family-owned clothing store was finalizing a $75,000 contract for their seasonal camping gear inventory. The deal seemed straightforward, but their new legal counsel ran the contract through Spellbook's AI review system. The software immediately flagged a subtle change in the deposit clause where the word "refundable" had been replaced with "applicable toward future orders."

If the supplier failed to deliver the summer inventory on time, the store would lose its $25,000 deposit with no immediate recourse. Thanks to the legal counsel and AI, the issue was caught in time, and the store was able to negotiate more favorable terms before signing.

5. Compare with Benchmarks

AI’s benchmarking feature compares sales agreements against industry standards and previous contracts to ensure competitive terms. This helps attorneys identify whether an agreement aligns with best practices or requires negotiation. 

While manual benchmarking can take days and involve consulting multiple reference documents, AI completes this analysis in minutes. This efficiency frees attorneys from hours of tedious document review, allowing them to spend more time on strategic analysis.

6. Redline and Suggest Changes

AI streamlines the redlining process by automatically suggesting edits that improve contract clarity and readability. AI-powered suggestions follow best practices and legal norms, ensuring contract terms remain enforceable.

7. Generate a Summary

Another time-saving feature of AI is that it can generate concise summaries of contracts. Legal teams and decision-makers can more quickly evaluate contracts without reading the entire document, saving hours of manual review.

8. Final Review

While AI provides a comprehensive review before signing, a lawyer should still provide the final approval of a contract. This involves thoroughly reviewing AI-generated suggestions and making final adjustments.

Overall, AI-powered contract review tools deliver a measurable return on investment by saving attorneys an average of 30 minutes daily, or approximately 120 hours per year.

Key Elements of a Sales Agreement

Below are the must-have sections in a sales agreement for legal clarity:

• Parties Involved - Clear identification of buyer, seller, and any other entities in the transaction
• Payment Terms - Detailed description of purchase price, deposit requirements, and payment schedule
• Delivery and Performance Obligations - Specific conditions regarding service delivery or product transfer
• Warranties and Liabilities - Explicit statements about quality guarantees and responsibility for defects
• Termination and Dispute Resolution - Procedures for addressing issues and ending the agreement
• Regulatory Compliance Clauses - Provisions ensuring adherence to relevant laws and regulations

Common Issues to Avoid

Costly errors in a sales agreement review to avoid include:

• Vague or Missing Payment Terms - Double-check explicit financial clauses to avoid any payment disputes.
• Lack of Compliance Checks - This involves examining the terms and conditions and detecting regulatory gaps that could create legal liability.
• Unclear Termination Clauses - Define dispute resolution terms explicitly to avoid protracted legal battles.
• Failure to Benchmark Against Industry Standards - Employ AI-powered benchmarking to ensure your contract offers competitive protections.

Key Takeaways

• AI-powered contract review reduces sales agreement review time while improving accuracy and risk detection.

• Specialized AI tools such as Spellbook analyze agreements for compliance gaps and potential risks while benchmarking terms against industry standards. 

• While AI can help review sales agreements efficiently and accurately, your legal expertise remains the decisive factor in all contract decisions.

Frequently Asked Questions (FAQs)

Who Conducts a Sales Contract Review?

Sales contract reviews are typically conducted by attorneys specializing in commercial or contract law.

Does Reviewing a Sales Agreement Take Long?

Traditional manual review may take 5-10 hours or longer for complex agreements. AI platforms such as Spellbook can cut review time down to minutes or hours.

Can I Review a Sales Agreement Without a Lawyer?

Yes, but it is not recommended for high-value transactions. AI tools can highlight potential issues, but only a lawyer with legal training and expertise can ensure the most comprehensive protection during the contract review process.