Contract Glossary
Purchase Agreement
Definition
A legally binding contract between a buyer and seller that sets out the terms and conditions for the sale of goods, assets, or property. It specifies what is being sold, the price, payment terms, delivery conditions, warranties, and what happens if either party fails to perform.
In Practice
You're buying a small business for $200,000. The purchase agreement specifies exactly what you're getting — equipment, inventory, customer lists, intellectual property — and what you're not (outstanding debts, pending lawsuits). It includes representations that the seller owns everything free and clear, a $20,000 escrow holdback for 90 days in case undisclosed liabilities surface, and a non-compete preventing the seller from opening a competing business within 25 miles for three years.
Example Clause
Seller agrees to sell, transfer, and convey to Buyer, and Buyer agrees to purchase from Seller, all of the Assets described in Exhibit A for a total purchase price of [Amount] (the 'Purchase Price'), payable as follows: [payment terms]. The closing of the transactions contemplated by this Agreement (the 'Closing') shall take place on [date] at [location or electronically].
Common in these contract types
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Frequently asked questions about purchase agreement
At minimum: identification of buyer and seller, description of what's being sold, the purchase price and payment terms, representations and warranties from both parties, conditions that must be met before closing, indemnification provisions, and signatures. For complex transactions, add exhibits listing specific assets, schedules of liabilities, and post-closing adjustment mechanisms.
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Create your contractThis content is for informational purposes only and does not constitute legal advice. For contracts with significant financial or legal implications, review by a qualified attorney is recommended.