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Key takeaways
- A purchase agreement is a contract in which a seller agrees to sell and a buyer agrees to buy goods or assets on stated terms.
- The clauses that matter most are description, price, delivery, title and risk, inspection and rejection, warranty, remedies and governing law.
- Use it for large, custom or repeat purchases. A routine order can run on a purchase order with standard terms.
- A template is a starting point. Have a lawyer review it for your country and your goods.
Free PDF and Excel: Purchase agreement clause checklist and tracker. Get it below
What a purchase agreement is
A purchase agreement is a written contract in which one party agrees to sell, and another to buy, specified goods or assets for an agreed price and on agreed terms.
Buyers reach for one when a standard purchase order does not carry enough protection: a machine worth six figures, a long-lead custom part, a supply contract over many deliveries, or the sale of a used asset. It sets out who owns the goods when, who carries the risk, what happens if the goods do not match the specification and what the remedies are.
A food manufacturer buys a used packaging line from another plant. The agreement describes the machines by serial number, sets a price in two instalments, names the date title passes, requires a factory acceptance test on site and gives the buyer ten working days to reject.
The test fails on one conveyor. The agreement says the seller must repair within 15 days or refund that instalment. Everyone knows the next step because it was written down.
Clauses to include
| Field | What goes in it | Why it matters |
|---|---|---|
| Parties and recitals | Legal names, addresses and the purpose of the agreement. | Prevents a dispute about who is bound. |
| Goods description | Specification, quantity, model, serial numbers, standards. | The thing you will test them against. |
| Price and payment | Total, currency, instalments, tax, payment terms. | Link to payment terms. |
| Delivery | Place, date and trade term, with who pays transport. | See trade terms. |
| Title and risk | When ownership and risk of loss pass. | Decides who bears loss in transit. |
| Inspection and rejection | Time to inspect, grounds for rejection, what happens next. | Without it, defects become arguments. |
| Warranty | Fit for purpose, conformity to specification, duration. | The buyer's main protection. |
| Remedies and liability | Repair, replace, refund, damages and limits. | Defines the worst case in advance. |
| Termination | Grounds and consequences. | Gives a way out. |
| Governing law and disputes | Which law and which forum. | Avoids a fight about where to sue. |
Free PDF and Excel
Purchase agreement clause checklist and tracker
A clause-by-clause checklist for reviewing a purchase agreement, with a tracker for the dates the agreement creates.
- Clause checklist
- Key dates tracker
- Questions to ask the seller
- Excel tracker for inspection, warranty and payment dates
Where it fits with other documents
A purchase order is the transaction record and often references standard terms. For services over time, use a master service agreement with a statement of work. When the agreement needs a change, see contract amendment.
Where agreements fail buyers
- A vague description that cannot be tested.
- Title passes on payment but risk passes on delivery, with no one insured in between.
- No rejection window, so a defect found in week three has no remedy.
- A warranty that is shorter than the maintenance cycle.
- Liability limits that cap damages below the purchase price.
- Governing law in a country the buyer has no practical way to sue in.
- Goods are described so they can be tested.
- Price, tax and payment terms are clear.
- Delivery place and trade term are named.
- Title and risk transfer points are stated.
- Inspection and rejection windows are defined.
- Warranty length and remedies are set.
- Governing law and dispute forum are chosen.
- A lawyer reviewed it.
Last checked: 19 October 2026. General contracting practice. This is not legal advice. Sale-of-goods law differs by country.
Frequently asked questions
What is the difference between a purchase agreement and a purchase order?
A purchase order is the buyer's order and often rides on standard terms. A purchase agreement is a fuller contract that sets out title, risk, inspection, warranty and remedies.
When do I need a purchase agreement?
For high-value, custom or repeat purchases, or when you want protections a standard order does not give.
Is a purchase agreement legally binding?
A signed agreement that meets the legal requirements for a contract is binding. A lawyer can confirm this for your jurisdiction.
Who drafts the purchase agreement?
Either side. Buyers with more bargaining power draft their own to set the terms, and sellers draft theirs when they are the bigger party.
Can I use a template?
Yes, as a starting point. Adapt it to your goods and have counsel review it.