When buying assets such as company stocks, real estate, and a large order of goods, you might want to record and capture these transactions' complexity with a legally binding document in the form of a Purchase Agreement.
The Purchase Agreement details the obligations and rights of the seller and buyer. These include the terms of payment and distribution of goods.
The Purchase Agreement is a record of the terms and conditions agreed upon by the buyer and seller involved in the agreement.
Depending on the context and preferred terminology, a Purchase Agreement may also be known as:
Purchase Contract
Sale Contract
Purchase and Sale Agreement
Contact for Sale of Personal Property
Personal Property Sales Contract
Personal Property Purchase Contract
Purchase Agreement for Personal Property
The Purchase Agreement is mostly used for complex transactions requiring careful definitions of the terms of payment and delivery. A Purchase Agreement is not applicable if the seller is a service provider, in which case the relevant document is the Services Agreement.
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A Purchase Agreement defines certain large business and private transactions, including real estate transactions. The document and its terms become legally binding after signing. Create your bulletproof Purchase Agreement on 360 Legal Forms to protect your interests.
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To create your document, please provide:
Seller's Information: The name and address of the seller, of which there can be more than one seller.
Buyer's Information: The buyer's name and address, of which there can be multiple buyers.
Description of Items: List and describe the items covered in the transaction. Optionally, item descriptions can be supplied in an attachment to the Purchase Agreement.
Purchase Price: The total value of the goods exchanged.
Delivery: The delivery date and method, which may include the payment method used.
Payment Schedule (optional): If applicable, this is a schedule of installment payments due and consists of the payment method.
Seller's Representation: The seller's confirmation of the condition of the items involved in the agreement.
Buyer's Representation: The buyer's agreement to purchase the items as is represented.
Governing Law: The state of residence of the seller or the buyer may take precedence.
Disputes: The preferred dispute resolution method, which can be mediation, arbitration, or litigation.
Effective Date: The date when the agreement is to become effective.
Seller: In the context of a Purchase Agreement, this is the selling party.
Buyer: In the context of a Purchase Agreement, this is the purchasing party buying from the seller.
Mediation: In the event of a dispute, the parties involved may use a mediator as a neutral party to help negotiate an acceptable resolution.
Court litigation: Civil court proceeding where a judge or jury decides the dispute resolution.
Arbitration: The hiring of a neutral arbitrator by the disputing parties to adjudge an equitable settlement.
A Purchase Agreement needs to be signed by all the concerned buyers and sellers. Optionally, both parties can secure witnesses to observe the document's signing to prevent future challenges to the signature in court.
The Purchase Agreement becomes effective after signing. Notarization is not required. However, getting the document notarized may strengthen the agreement. If the parties reside across state lines, they get the document notarized separately. After that, all parties to the agreement should receive a copy of the Purchase Agreement for records.
Purchase Agreement can be reviewed periodically to ensure compliance. The buyer and the seller can also use a contract amendment to alter the terms of the agreement.
Finally, the Purchase Agreement can be strengthened with a promissory note or loan agreement.
While both documents are legally binding, there is a difference in enforceability. A purchase order becomes a binding contract once it is accepted. However, if the seller is to alter the terms, the contract is invalidated unless the changes are approved by the buyer. In the meantime, the shipment of goods may be postponed. In contrast, a Purchase Agreement remains enforceable as long as it is backed up by the relevant purchase order. Additionally, purchase orders are typically used in low risk situations. At a higher risk level, buyers and sellers may want to insist on the use of a Purchase Agreement, which allows for comprehensive risk management. A final notable difference is that the Purchase Agreement has to be signed before order fulfillment, whereas a purchase order becomes valid at its acceptance. Once accepted, the purchase order becomes an enforceable contract.
There is a particular version used for this purpose known as the Real Estate Purchasing Agreement. It is the same as the regular Purchase Agreement with additional terms as relates to real estate. These include pricing and financing, property details, a list of appliances excluded or included in the sale, earnest money deposit amount, and closing and possession dates.
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