What Is a Purchase Agreement? Explained

Standardized Legal Documents What Is a Purchase Agreement? Explained

What Is a Purchase Agreement? Learn All About It!

Whether you’re buying or selling a property or certain goods, you may need a purchase agreement. What is a purchase agreement? We’ll walk you through the ins and outs of this legal document and show you the best way to generate various kinds of contracts.

Purchase Agreement Explained

A purchase agreement is a document between a buyer and a seller stipulating the terms and conditions of a purchase. This agreement binds both the seller and the buyer to follow the terms they agreed to and make a transaction.

The basic elements of a purchase agreement are:

  1. Seller
  2. Buyer
  3. Purchased/sold property
  4. Purchase price
  5. Payment

The main purposes of a purchase agreement are to deter scams and safeguard against losing money. Both parties should sign the document before making the transaction.

In addition to or instead of a purchase agreement, you may use a bill of sale, which is signed after the purchase takes place to document the transfer of ownership.

When Are Purchase Agreements Used?

Purchase agreements are typically used for high-value items—$500 and pricier—but they can also document a variety of properties:

  • Pianos
  • Firearms
  • Computers
  • Designer gowns
  • Bicycles
  • Cars and other vehicles
  • Furniture
  • Appliances
  • Smartphones
  • Diamond rings
  • Sports equipment
  • Concert tickets

The most common purchase agreements are real estate purchase agreements, such as those for a lease or a mobile home purchase, and a real estate purchase agreement with seller financing. Other types also include asset, power, and stock agreements.

What Should a Purchase Agreement Include?

What terms and conditions a purchase agreement needs to include varies depending on the purchased property as well as on the buyer’s and the seller’s wishes. Take a look at what a typical purchase agreement and a real estate purchase agreement cover in the table below:

Purchase AgreementReal Estate Purchase Agreement
  • Details about the buyer and the seller, including their names, addresses, and phone numbers
  • Agreement date
  • Description of the property that is purchased
  • Type of sale
  • Quantity of the goods
  • Purchase price
  • Payment details
  • Duration of the agreement
  • Terms of shipping and delivery
  • Details stating whether amendments or revisions to the agreement are allowed
  • Consequences of default by either party
  • Warranties, if applicable
  • Dispute resolution options
  • Signatures of both parties
  • Buyer and seller info
  • Date of the agreement
  • Closing date
  • Details of the person responsible for closing costs
  • Home inspection requirements
  • The terms of financing, if applicable
  • Contingency clauses
  • Any repairs the seller is responsible for
  • Seller disclosures (e.g., environmental hazards)
  • Dispute resolution options
  • Signatures of both parties

A Breach of a Purchase Agreement

Both the buyer and the seller could potentially breach the purchase agreement. This may include:

  • Committing fraud
  • Selling the wrong item
  • Not making payments
  • Selling the item to another party
  • Failing to deliver the goods on time or at all
  • Changing their minds and refusing to make the purchase

The remedies for a breach of contract depend on the specific situation. Sometimes, reimbursement is enough, and other times, the issue may lead to a lawsuit.

Creating Legal Documents Is Easy With the Help of DoNotPay

If you decide to have a bill of sale for your purchase, DoNotPay can help out! Our Standardized Legal Documents product is designed to generate various agreements for you so that you don’t have to resort to contract templates.

Check out how to create legal documents once you sign up for DoNotPay:

  1. Type in the name of the legal document you want to draw up
  2. Answer a few questions to customize it
  3. Download your contract

In a few simple steps that take minutes, you’ll get an iron-clad document! Once it’s ready, you can e-sign it and fax it using our Online Fax product. If your document needs to be notarized, we’ve got that covered, too. Having a DoNotPay account gives you access to everything our AI-driven app has to offer!

What Documents Can DoNotPay Draft?

Our app does all the heavy lifting and writes up personalized documents for you in a flash. Create a DoNotPay account and get a document without the need to hire a lawyer! Here’s what contracts and agreements we can help you with:

Type of DocumentsList of Legal Documents
Real Estate
  • Quitclaim Deed
  • Intent To Purchase Real Estate
  • Residential Lease Agreement
  • Estoppel Certificate
Business
Other

Want To Learn About More Agreements? We Can Help!

If you’re interested in learning about other legal documents aside from purchase agreements, you may find what you’re looking for in our ever-growing learning center. Check out our articles on:

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