There aren’t many people who look forward to filling out paperwork; the very term usually breeds irritation and stress when uttered to anyone who has spent time filling out tax forms or lengthy job applications. However, there is one form of paperwork that really shouldn’t be looked at as quite a burden: a purchase agreement.
We all want to believe the best in the people with which we interact, and this includes those that we buy from and sell to. But the harsh reality is that we live in a very litigious time and in a very litigious country where, often times, the only things that can save our hides are the documents we have to support one side of a story or another. Because of this, purchase agreements are a must have anytime you buy or sell an item of significant value.
Purchase Agreement Basics
While purchase agreements don’t have to be overly complex, there are definitely a few items that you should always be sure to include:
- Names of both parties entering into the agreement
- Item(s) being sold and any warrantees or representations, or if the item is being sold ‘as-is’
- Total purchase price
- Current location and condition of the item being sold
- Details as to how payment will be completed – especially if there are multiple payments or payment is contingent on items like repairs, completed projects or inspections.
- Jurisdiction of disputes
- Signatures – including dates if possible – for all parties involved
In addition to peace of mind, purchase agreements are required a number of different scenarios. Interstate commerce requires purchase agreements to be included with any shipments. International commerce requires purchase agreements in order to pass through customs. The government also requires a purchase agreement for taxation purposes.
Aside from the number of entities that require this type of paperwork, written agreements allow for both the buyer and seller to plan for a worst case scenario. While most transactions go through with little friction, planning for the worst will ensure that both parties can rest easy knowing that a plan of action is in place.