Purchase Price Agreement: Everything You Need to Know
A purchase price agreement specifies that one party will purchase an asset from another party for a specific price.3 min read
2. Information to Include in Sales Agreements
A purchase price agreement specifies that one party will purchase an asset from another party for a specific price. These agreements are commonly used for real estate transactions. They can also be very similar to sales agreements.
Facts About Sales Agreements
Sales agreements are one of the most common types of contracts, and they can go by many different names:
- Sales contract.
- Sale of goods contract.
- Purchase agreement.
- Purchase and sale agreement.
- Buyer and seller agreement.
Basically, a sales agreement outlines a transaction that will take place between a seller and a buyer. The buyer is the contracted party that is paying for a service or good, and the seller is the person or entity that provides the service or good.
Bills of sale and sales agreements serve nearly the same function, with the main difference being that sales agreements often include more details. For example, a sales agreement can include a warranty or outline a plan for payment. Sales agreements are very flexible contracts in terms of how they can be written.
In general, a bill of sale serves as proof that ownership of an asset has been transferred. You can use a sales agreement to outline the sale of a physical item such as a piece of furniture or an automobile. These agreements are also used for selling and buying services, such as installing an appliance like an oven. Sales agreements can cover both goods and services. For example, the agreement could outline the sale of a product such as a computer and a service such as setting up the device.
Information to Include in Sales Agreements
The most important part of drafting a successful sales agreement is providing a clear description of the service or good to which the contract is dedicated. The contract should include information about both parties. Details of how payment should occur and the agreed-upon purchase price must also be a part of any sales agreement.
Other important information to add to your sales agreement includes:
- Details about delivery, if necessary.
- A description of the liabilities of both parties.
- Steps to resolve disputes between the buyer and seller.
If you are drafting a sales agreement related to a service, you also need to outline the required payment plan. In these contracts, the term “payment” refers to however the buyer will pay for the good or service they are receiving. Your contract can require whatever form of payment you wish, including:
- Bank drafts.
- Promissory notes.
- Electronic transfers.
In addition to outlining the terms of a sale, a sales agreement can serve as proof of a completed transaction. For sales agreements that include a payment plan, meaning the buyer is paying in installments, the seller should provide the buyer with a receipt after each payment. Providing regular receipts can be very useful when the buyer makes payments in cash.
Some sales agreements require a deposit, which is an amount of money agreed to by both the buyer and the seller that will serve as a type of insurance that the transaction will be completed. If the buyer decides to follow through with the sale, then the deposit will be used towards the total price for the service or good. In some cases, a deposit will be non-refundable, which means the seller gets to keep this money if the buyer does not complete the transaction.
When drafting a payment plan, you should be certain to include exact due dates, both for regular payments and for the deposit, if necessary. Including this information should make the terms of the agreement clear to both parties.
Depending on the nature of the transaction, you may also want to define delivery terms. For example, you will need to decide if the item will be shipped directly to the buyer, if the item will be delivered to the seller and then later picked up, or if the item will be delivered at a location agreed to by both parties.
The liability section of your sales agreement will describe which party is responsible if the item becomes damaged during the transaction. Typically, once the buyer has received the item, they will be responsible for what happens to it after that point.
If you need help with a purchase price agreement, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.