What is a purchase agreement?
A purchase agreement is a legally binding document between two parties - a buyer and a seller. As a result, the agreement needs to outline the terms and conditions of the sales and purchase. That means outlining what is being sold, when and how.
It should also outline any warranties and any instances where delays are allowed without liability. A force majeure clause is often used to outline circumstances beyond a seller’s control that meant they could not meet the other terms of the contract for product delivery.
How does a purchase agreement work?
While the concept of a purchase agreement is usually the same from agreement to agreement (a contract that outlines the terms and conditions under which a buyer and seller have obligations to meet) the clauses within them can be very different from one to the next.
Our purchase and sales agreement, for example, has a standard template, but that can be amended as necessary to fit the requirements of the transaction in question. What is crucial is that a purchase agreement is clear and written in plain language so that it can be as effective as it can be. That means clauses should not leave room for misinterpretation or confusion. Instead, what is generated is a contract where both parties know what is required of them and they are happy with those terms.
Some purchase agreements will have contingency clauses written into them which means that some products will only be delivered if certain criteria are met, or certain prices will only be paid if certain criteria are hit. When it comes to real estate, most purchase agreements are contingent on which two items is a question that can often be asked. The answer is that they are contingent on the buyer finding a mortgage and that the property in question passes a quality inspection.
Advantages of a purchase agreement
Even a simple purchase agreement contract provides many advantages for both sides of the arrangement. For, the main purpose of the contract is that it should give a clear demarcation of what is expected of both parties. The results that stem from the purchase agreement are far more likely to be what was intended and less likely to be haphazard, which may be the case if an informal arrangement was verbally decided. Purchase agreements are fantastic, therefore, for protecting both sides who can seek legal remedy if there is a breach of contract, but it will also mean that terms and conditions in the contract are more likely to be upheld anyway.
Contractbook and purchase agreements
Contractbook has several types of purchase agreement template to suit many different needs. For example, we have a purchase and sale agreement ready to go that can be easily and quickly amended as you require. Making use of our templates and software can help take the administrative effort out of creating a purchase agreement, leaving you just with the benefits to enjoy.