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Home Legal Documents Purchase Agreement

Free Purchase Agreement

Use our Purchase Agreement to record the sale of an item.

Updated November 16, 2020

A Purchase Agreement is a legal document between two parties, the Seller who wishes to sell a piece of personal property and the Buyer who wants to buy that property. The Agreement describes the terms and conditions of the sale and ensures that both parties will follow through on their promises regarding that sale.

It should identify the following basic elements:

    • Seller: the person who has the personal property and wants to sell it
    • Buyer: the person who will become the new owner
    • Personal Property: a detailed description of the property
    • Purchase Price: how much the Buyer will be paying for it
    • Payment: how and when the Seller will be paid for it

A bill of sale or invoice can and should be used in conjunction with a purchase agreement.

Table of Contents
  1. What is the difference between a Purchase Agreement and a Bill of Sale?
  2. When a Purchase Agreement is Needed
  3. Most Common Uses for Purchase Agreements

What is the difference between a Purchase Agreement and a Bill of Sale?

A Purchase Agreement is signed before any property or money is exchanged. It is an agreement between the parties to enter into a future transaction and documents the details of what that transaction will be.

A Bill of Sale is signed during or after the exchange of money and property. It documents the transfer of ownership from the Seller to the Buyer, and acts as a receipt to the transaction.

As a reference, this document known by other names:

  • Agreement to Sell Personal Property
  • Sale and Purchase Agreement
  • Contract for Sale of Personal Property

This document can cover a wide range of personal property being sold.

When a Purchase Agreement is Needed

If you are either selling or purchasing any personal property, you should consider documenting your transaction in a Personal Property Sales Contract. A written Contract will allow both parties to carefully consider and describe the details regarding the sale, and confirms each party’s understanding of how the transaction will take place.

It is also important to keep a record of the property that you sell for tax and accounting purposes. Selling property may have an impact on your tax return. The Internal Revenue Service (IRS) requires you to report all miscellaneous income, including income from the “barter and exchange of goods”.  A tax lawyer or certified accountant can give you more information about how the sale of property may impact your tax return.

Some states require that a sales and use tax be added to the purchase price of personal property being sold. Be sure to include who will be responsible for any such taxes in your Purchase and Sale Agreement.

A simple Purchase and Sale Agreement could help prevent some of these consequences:

SELLERBUYER
1. Lost time1. Lost time
Appearing in court to clarify ownership and titleAppearing in court to clarify ownership and title
Lawsuit to get full purchase priceLawsuit over purchase price
Difficult to clear your nameTitle transfer more difficult
2. Lost money2. Lost money
Unexpected “gift” of propertySeller did not have legal title
Liable for fees and violationsUnfair seizure of illegal item
Did not get paid on timeHad to pay more money to get item
Penalties for improper salePurchased a faulty item or “lemon” car
3. Personal safety3. Personal safety
Disgruntled purchaser expected the item to be in perfect conditionFaulty or defective car or item is a threat to public safety and your well being

Most Common Uses for Purchase Agreements

Here are just a few things a Buyer or Seller might buy or sell using a Purchase Agreement:

  • Car or truck
  • Motorcycle
  • Bicycle
  • Furniture
  • Appliances
  • Smartphone
  • Computer
  • Diamond ring
  • Designer gown
  • Sports equipment
  • Firearm
  • Horse
  • Concert tickets
  • Piano

A simple Purchase Agreement should generally have at least the following:

  •      Who are the Seller and the Buyer
  •      What is the item being sold
  •      Where are the Seller and Buyer located
  •      When will the item be delivered
  •      How much is the Buyer paying for the item

Here are some other details a Purchase Agreement might include:

  • Governing Law: the state’s laws that will govern the Agreement
  • Payment Plan: any down payment or installments and when they are due
  • Representations: the Seller owns the item, but otherwise is selling it “as is”
  • Taxes: the Buyer is responsible for paying any sales and use tax

Purchase Agreement Sample

The sample purchase agreement below details an agreement between a seller and a buyer. The seller agrees to sell an item to the buyer according to the specified conditions.

If you’re looking to sell or purchase a business, please use our business purchase agreement.

Related Personal Property Documents

View All Documents

Buy/Sell Items

  • Bill of Sale
  • Boat Bill of Sale
  • Firearm Bill of Sale
  • Horse Bill of Sale
  • Motorcycle Bill of Sale
  • Trailer Bill of Sale
  • Vehicle Bill of Sale
purchase agreement template
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Free Purchase Agreement Form

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