Facts about the Purchase Agreement template

What is a Purchase Agreement?

A purchase agreement is a contract in which one party agrees to buy something from another party. The legal document also lays out the terms of the transaction. It is a legally binding agreement indicating that both parties will follow through on the sale and their relevant promises. Although it may be used for a variety of purchases, this type of agreement is most commonly used for relatively complex sales that may require an extended process to complete the transactions such as real estate or business purchases.

The purchase agreement is signed before the seller delivers the goods and before the purchaser pays for them. Part of the reason for this is to help protect each party from the other party backing out before the transaction is complete, especially if there is some investment necessary (due diligence, shipping etc.).

Using a purchase agreement can also give the two parties more flexibility about how the transactions will proceed. Whereas a bill of sale may be used when the goods and payment are exchanged at the same time, a purchase agreement may be used if the buyer is going to pay over time. Outside of commercial transactions, real estate is the field that most uses purchase agreements.

What is a Purchase Agreement used for?

You may use a purchase agreement for any transaction that the buyer and seller have agreed upon, especially if that transaction is a complicated one. For many people, the familiar form of a purchase agreement is used when buying or selling a home or other real estate. Many businesses use these agreements to lay out the terms for large or complicated orders, particularly those that may require some investment by either or both parties before the goods and payment are exchanged. Purchase agreements are also commonly used for transacting stocks or business assets when selling or buying a company.

Why should you use a Purchase Agreement form?

The most significant benefit of a purchase agreement is that it creates a legally binding contract between the two parties that the transaction will proceed. This can help to protect you from the other party backing out of the transaction, especially if it will be completed over an extended time. Some businesses use purchase agreements whenever they receive orders, regardless of complexity.

For the most part, the content of a purchase agreement is standard (other than the description of the transaction). Therefore, it is typically easiest to use a purchase agreement template rather than trying to write the terms yourself. This is especially true for businesses that regularly sign purchase agreements with customers. In this case, you may want to customize a purchase agreement template to fit your business. Then, you can continue to reuse the same template.

How to write a Purchase Agreement?

Writing a purchase agreement is relatively simple in most cases. The most complex parts of these agreements tend to be any warranties made by either party and any contingencies requested by the buyer. The following are some of the major elements of a purchase agreement:

  • Buyer and Seller:

    The agreement must identify the involved parties (both buyer and seller). Typically, this should include names and addresses.

  • Description of Goods:

    The document must include a description of the goods involved in the transaction. This can be anything from a business’ products to real estate to shares in a company.

  • Purchase Price:

    Additionally, the agreement must clearly state the purchase price for the goods. It is a good idea to tabulate all the involved costs (such as taxes and any fees) into a simple total.

  • Payment Terms:

    You should include how and when the payment will be made by the buyer. This can be in a lump sum or several installments. Additionally, you may want to include consequences for late payment such as interest and/or fees.

  • Delivery Terms:

    Similarly, you should describe how the goods will be delivered. This should include a delivery date, where the delivery will be made and who is responsible for paying for it.

  • Signatures:

    Both the buyer and the seller will need to sign the document. This type of agreement does not typically require notarization, so a simple signature page will suffice.

How to Fill Out a Purchase Agreement with PDFSimpli in Five Steps

  • 1. Prepare:

    Before beginning to write your purchase agreement, spend some time gathering the relevant information and agreeing on the basics of the terms. Ideally, both parties should have agreed in principle on the transaction before writing the agreement. This is often achieved through a purchase order or other communication such as making an offer on a purchase.

  • 2. Choose Software:

    Once you have the relevant information and have discussed the outline of the agreement, it is time to find a purchase agreement template. Choose software that will help you easily edit your template. PDFSimpli has an online editor that is great for producing PDF documents. You can save your work to the cloud and work from any device. It is especially helpful for businesses that intended to keep reusing the same template.

  • 3. Fill Out or Edit the Purchase Agreement:

    Open the template in the online editor and fill it out. You can also edit the terms as you go. By adding images, drawings and watermarks, you can include relevant details such as images of the asset(s) and lines for signatures. PDFSimpli makes it easy to edit and manage all your legal documents.

  • 4. Review:

    This is an important part of completing your transaction. So, it is a good idea to thoroughly review the agreement before signing it. Consider watermarking a draft them printing it out. This is a good way to keep the copies of the document organized. You can also review in the online editor.

  • 5. Save, Download, Print or Send for Signature:

    Finally, it is time for both parties to sign the document. You can add your signature online by uploading, drawing or typing it in PDFSimpli. Then, you can send it for a signature to the other party. Alternatively, you can print directly from the editor. If you prefer to save it for later, you can also download the document.

Purchase Agreement Frequently Asked Questions

No, a purchase agreement is typically signed after an offer has been made. The offer may take the form of a bid on a piece of real estate or a business. It may also be a purchase order submitted to the seller. Typically, the general terms of the transaction have been worked out by the time the parties sign a purchase agreement; the offer is part of the process of agreeing to the terms.

Depending on the type of transaction, either party can draw up the purchase agreement. This is often done by the seller for routine commercial transactions. If making a large, one-off purchase, the buyer may submit a proposed agreement. For real estate, the buyer’s agent typically drafts the real estate purchase agreement. However, this can depend on the rules of the jurisdiction that the real estate transaction is taking place in.

A purchase agreement is a legally binding document. Therefore, you cannot typically back out of the agreement without some consequences. In some cases, the other party may even be able to legally compel you to proceed with the transaction. However, most purchase agreements have some warranties and conditions. For example, your real estate purchase agreement may be contingent upon a home inspection or a financing contingency.