Can this agreement be signed electronically?

Yes. Electronic signatures are legally binding under the ESIGN Act (15 U.S.C. §7001) and UETA in most states when intent, consent, signer attribution, and record retention are satisfied. Certain exceptions (wills, some court filings) remain ineligible for e-signature.

Do I need notarization or witnesses?

Not typically for commercial drop-ship contracts. Notarization or witness requirements are rare unless local law or a specific party requires them. Remote online notarization (RON) varies by state and may impose identity-proofing and recording requirements.

Who should sign on behalf of the company?

An authorized representative with authority to bind the entity should sign and list their printed name and title. Larger obligations may require board approval or a corporate resolution; verify internal authority prior to execution.

How should returns and defective goods be handled?

Include a clear RMA process, inspection criteria, timelines for returns or credits, restocking fees if any, and specify which party pays return shipping and who inspects defects to determine remedies.

What remedies exist if a supplier misses shipments?

Agreements typically specify remedies such as expedited replacement shipments, credits or liquidated damages, service-level remedies, or termination rights for repeated breaches; include notice and cure periods to enable dispute resolution.

How can the agreement be amended or canceled?

Amendments should be in writing and signed by authorized parties; cancellation clauses should state notice periods, handling of in-transit orders, and wind-down responsibilities to avoid inventory or financial disputes.

Electronic Signature
Templates
Sales
Sales Drop Ship Agreement

Sales Drop Ship Agreement

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

SALES DROP SHIP AGREEMENT

This Sales Drop Ship Agreement (the Agreement) is entered into as of by and between the parties identified below. The parties agree as follows.

PARTIES

Seller (Drop Ship Supplier) Seller Entity Type (check all applicable)

Corporation LLC Sole Proprietorship / Individual Other:

Seller Billing Address and Contact Buyer (Reseller / Retailer) Buyer Billing Address and Contact

RECITALS AND DEFINITIONS

The Seller manufactures or supplies the Products listed below and agrees to accept purchase orders submitted by the Buyer for fulfillment by direct shipment to the Buyer’s customers (End Customers). For the purposes of this Agreement: "Products" means the items listed in the Product Schedule; "End Customer" means the recipient designated by Buyer on each purchase order.

PURCHASE ORDERS AND PRODUCT SCHEDULE

Purchase orders shall be submitted in writing or electronic purchase order form and must include an Order Number: , the full Ship-To name and address for the End Customer, product SKUs, quantities, and requested ship date.

Item / SKU	Description	Quantity	Unit Price	Total

Subtotal Taxes Shipping / Handling Total Amount Due

PAYMENT TERMS

Unless otherwise agreed in writing, Buyer shall pay Seller within days of invoice. Accepted payment methods: . Late payments accrue interest at per month or the maximum allowed by law, whichever is less.

DELIVERY AND DROP SHIP PROCEDURES

Seller shall ship Products directly to the End Customer at the Ship-To address specified by Buyer on the applicable purchase order. Requested ship date: . Standard lead time: .

Shipping method: . Seller will include packing slips and will not include Seller’s pricing on drop-ship shipments unless otherwise directed in writing by Buyer.

Risk of loss and title pass to Buyer or End Customer as follows (check one): Risk transfers upon carrier pickup from Seller Risk transfers upon delivery to End Customer

PACKAGING, LABELING AND BRANDING

Buyer shall provide any required packaging, branding, or fulfillment instructions in writing. Seller will comply with reasonable labeling requirements supplied by Buyer, provided such instructions are received at least business days prior to shipment.

WARRANTY

Seller warrants that the Products delivered under this Agreement shall conform to Seller’s published specifications and be free from defects in materials and workmanship for a period of from date of shipment. EXCEPT AS EXPRESSLY SET FORTH HEREIN, SELLER DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

Warranty Coverage and Exclusions

RETURN, CANCELLATION, AND REFUND POLICY

Returns are accepted only with prior written authorization from Seller. Buyer shall notify Seller of any non-conforming Product within days of delivery. Restocking fee (if any): . Buyer or End Customer shall not return Products without a Return Authorization Number issued by Seller.

Return Instructions / Refund Process

LIMITATION OF LIABILITY AND INDEMNIFICATION

Except for breaches of confidentiality or willful misconduct, neither party shall be liable to the other for incidental, consequential, special, punitive or exemplary damages. The aggregate liability of either party for any claim arising out of or related to this Agreement shall not exceed the total amounts paid by Buyer to Seller under the applicable purchase order giving rise to the claim.

Indemnification by Seller Indemnification by Buyer

INSURANCE AND COMPLIANCE

Each party shall maintain commercial general liability insurance and, where applicable, product liability insurance with limits no less than per occurrence. Each party shall comply with all applicable laws, regulations and export control requirements.

TERM, TERMINATION, AND EFFECT OF TERMINATION

This Agreement shall commence on the Effective Date and remain in effect until terminated by either party upon days' prior written notice. Upon termination, Seller shall fulfill accepted purchase orders unless otherwise agreed in writing. Termination shall not relieve either party of obligations incurred prior to termination.

CONFIDENTIALITY

The parties agree to keep confidential all non-public business information disclosed in connection with this Agreement for a period of from disclosure, except as required by law or to enforce rights under this Agreement.

GOVERNING LAW; DISPUTE RESOLUTION

This Agreement shall be governed by the laws of the State of without regard to conflict of law principles. Any dispute arising under this Agreement shall be resolved by binding arbitration in the county of , unless the parties agree otherwise in writing.

MISCELLANEOUS

Entire Agreement: This Agreement, together with any incorporated price lists and purchase orders, constitutes the entire agreement between the parties and supersedes all prior negotiations. Amendments must be in writing and signed by authorized representatives of both parties.

Notices

Seller Printed Name:

By:

Date:

Buyer Printed Name:

By:

Date:

What a Sales Drop Ship Agreement Covers

A Sales Drop Ship Agreement is a commercial contract that sets terms between a retailer (seller) and a supplier (drop shipper) when the supplier ships goods directly to the buyer on the seller’s behalf. It allocates responsibilities for order acceptance, fulfillment, shipping costs, title transfer, returns, warranties, insurance, data sharing, and dispute resolution. The document clarifies timing, payment terms, liability for lost or damaged goods, and termination mechanics so both parties can operate predictable fulfillment and finance workflows.

Why a Clear Drop Ship Agreement Matters

A clear Sales Drop Ship Agreement reduces disputes, clarifies fulfillment responsibilities, protects against lost shipments and chargebacks, and documents pricing and return policies. It also allocates liability and risk, supporting predictable operations and stronger supplier-retailer relationships.

Who Typically Uses and Signs This Agreement

Retailers, brands, suppliers, and fulfillment partners use Sales Drop Ship Agreements to define order handling, shipping liability, and payment terms.

E-commerce retailers: Manage product listings, orders, and customer expectations when suppliers ship directly.
Manufacturers/suppliers: Define packaging, fulfillment timelines, warranty handling, and inventory ownership terms.
Logistics/3PLs: Specify carrier selection, tracking, claims handling, and communication protocols.

Small e-commerce sellers and large multi-channel retailers both rely on standardized templates to speed onboarding and reduce fulfillment errors.

Core elements to include in a professional agreement

A professionally drafted Sales Drop Ship Agreement clearly assigns roles, timelines, financial terms, risk allocation, return procedures, and performance metrics to reduce ambiguity during order fulfillment.

Parties

Identify seller, supplier, and any third-party insurer or logistics provider; include legal names, addresses, and authorized contact points for order and dispute resolution, including billing and shipping contacts.

Order Process

Describe order placement, acceptance criteria, lead times, inventory synchronization, cancellations, and how backorders are handled; specify EDI or API integrations if used, with retry and notification procedures.

Shipping & Risk

Allocate carrier selection, freight terms (FOB or equivalent), who pays shipping costs, title transfer point, insurance responsibilities, and procedures for lost or damaged goods claims.

Pricing & Payments

Set product pricing, discounts, fees, invoicing cadence, payment terms, penalties for late payment, and responsibility for chargebacks or refunds.

Returns & Warranty

Define return authorization process, restocking fees, warranty coverage periods, defective product handling, and reverse-logistics responsibilities.

Compliance & Data

Include data handling, privacy clauses, HIPAA or PCI considerations if applicable, confidentiality, export controls, and audit rights for quality checks.

Required information to collect in the agreement

Seller Name: Full legal entity name.

Supplier Name: Full legal entity name.

Addresses: Street, city, state, ZIP.

Tax ID: EIN or SSN as applicable.

Payment Terms: Net terms, method, billing schedule.

Signatories: Authorized signer name and title.

Step-by-step: complete and execute the agreement

Follow these steps to complete, sign, and exchange a Sales Drop Ship Agreement efficiently and in compliance with e-signature rules.

01

Prepare Document: Assemble product, pricing, and shipping terms.
02

Assign Fields: Place signature, date, and payment fields.
03

Send for Signature: Email or generate secure signing link.
04

Archive & Monitor: Store executed copy and track fulfillment milestones.

Configure online workflow and field settings

Set up the online workflow fields and authentication so signatures are captured legally and orders route correctly.

Fillable Field Name and Configuration Purpose	How to configure each field for automated workflows.
Signature Field (Signer Authentication Settings)	Require signer name, date, and choose authentication level (email or SMS code).
Shipping Address Field (Validation Rules)	Enforce street, city, state, ZIP format; block P.O. boxes for delivery.
Payment Terms Field (Invoice Automation)	Specify net terms, currency, and trigger invoice generation on shipment.
Return Authorization Field (Workflow Trigger)	Capture RMA number and route returns to supplier and finance teams.

Digital signing and platform requirements

Technical and platform requirements for e-signing and exchanging Sales Drop Ship Agreements online, including integrations and supported file formats.

File Types: PDF, DOCX, and HTML supported.
Security Standards: TLS 1.2/1.3 and AES-256 encryption.
Integrations: Salesforce, NetSuite, Google Workspace, Box.

Key dates and timing to track

Key timing considerations for Sales Drop Ship Agreements, including effective dates, shipping lead times, notice periods, and tax or customs deadlines.

Effective Date and Contract Start:

Effective date begins obligations; use MM/DD/YYYY format.

Standard Shipping Lead Time Commitments:

Specify carrier lead times and expected ship dates in business days.

Notice Periods for Damage Claims:

Set deadlines for damage claims and return authorizations.

Tax and Customs Deadlines:

Include responsibilities for customs, duties, and required tax forms.

Termination Notice:

Define notice period for termination and obligations on wind-down.

Common errors to avoid when preparing the agreement

Failing to define who owns inventory at each stage, causing disputes over lost, damaged, or returned items, and complicating cost recovery or insurance claims.
Using vague shipping terms (for example, 'reasonable shipping') rather than explicit FOB, CIF, or prepaid/collect designations that determine risk and cost responsibility.
Not specifying chargeback and refund procedures, leaving the seller exposed to payment reversals and unresolved disputes with customers and suppliers.
Omitting required tax identification, resale certificates, or customs documentation, which can cause shipment delays, fines, or incorrect tax treatment.

Potential penalties and commercial risks

Chargeback Liability: Financial losses and processing fees.

Late Shipment Penalties: Contractual fines or rate reductions.

Customs Penalties: Duties, fines, or seizure.

Breach of Contract: Damages and termination rights.

Data Privacy Violation: HIPAA/PCI exposure possible.

Tax Exposure: Incorrect sales tax or reporting.

eSignature vendor pricing and feature comparison for this agreement

Basic eSignature pricing and feature comparison for executing Sales Drop Ship Agreements; signNow listed first for vendor comparison.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial	Varies by plan	Varies by plan	Varies by plan	Varies by plan
Bulk Send	Yes (Premium tier)	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No

Frequently asked questions about Sales Drop Ship Agreements

Answers to common questions about using, signing, and managing Sales Drop Ship Agreements, including eSignature, notarization, and amendment concerns.

Need help? Contact support

Can this agreement be signed electronically?
Yes. Electronic signatures are legally binding under the ESIGN Act (15 U.S.C. §7001) and UETA in most states when intent, consent, signer attribution, and record retention are satisfied. Certain exceptions (wills, some court filings) remain ineligible for e-signature.
Do I need notarization or witnesses?
Not typically for commercial drop-ship contracts. Notarization or witness requirements are rare unless local law or a specific party requires them. Remote online notarization (RON) varies by state and may impose identity-proofing and recording requirements.
Who should sign on behalf of the company?
An authorized representative with authority to bind the entity should sign and list their printed name and title. Larger obligations may require board approval or a corporate resolution; verify internal authority prior to execution.
How should returns and defective goods be handled?
Include a clear RMA process, inspection criteria, timelines for returns or credits, restocking fees if any, and specify which party pays return shipping and who inspects defects to determine remedies.
What remedies exist if a supplier misses shipments?
Agreements typically specify remedies such as expedited replacement shipments, credits or liquidated damages, service-level remedies, or termination rights for repeated breaches; include notice and cure periods to enable dispute resolution.
How can the agreement be amended or canceled?
Amendments should be in writing and signed by authorized parties; cancellation clauses should state notice periods, handling of in-transit orders, and wind-down responsibilities to avoid inventory or financial disputes.

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