What Is an Asset Purchase Agreement?
An asset purchase agreement is a contract that transfers a specific asset from a seller to a buyer. It applies to personal or business property and explains exactly what’s being sold and for how much. The agreement outlines how the transfer will happen, who’s involved, and what condition the asset is in.
How the UCC Defines Assets in an Asset Purchase
The UCC mainly covers movable, physical assets like equipment and inventory. These goods must exist and be clearly identified before ownership transfers.
Items that do not yet exist count as future goods and create a promise to sell. The UCC also allows sales of partial interests or entire commercial units sold as one whole. Assets outside the UCC can still be included if they’re described clearly.
When to Use an Asset Purchase Agreement
An asset purchase agreement works when you need a simple contract for a property transfer. It applies when the deal involves one asset or a defined group of assets, not an entire business. It gives both sides a clear record of the terms so everyone agrees on what’s being sold and how the transfer will work. You can use one when you need:
- To transfer one asset or a small set of assets when the deal doesn’t involve the whole business.
- A written record of the sale terms so both sides know what was agreed to.
- Proof of the seller’s legal authority when the buyer needs confirmation the asset can be transferred.
- As-is sale terms when the parties want the asset’s condition noted at transfer.
- Clear instructions for how and when the transfer will happen.
These points help confirm when this type of contract fits the transaction. Overall, it’s the right choice when you need a straightforward way to document a limited asset transfer without treating it like a full business sale.
- Use a business bill of sale when the deal involves buying an entire business.
- Use a share purchase agreement when you’re buying shares of a company rather than its assets.
- Use a business asset purchase agreement when you’re buying specific assets instead of the whole business.
What Assets Can (and Can’t) Be Included in This Agreement?
You can include many types of property in an asset purchase agreement as long as each item is identifiable and the seller has the legal right to transfer it. It works best for assets that can be described clearly and moved without extra paperwork.
Assets That Can Be Included
Asset purchase agreements handle straightforward items well.
- Physical items like equipment, tools, furniture, appliances, electronics, jewelry, or vehicles.
- Groups of assets listed together or broken out in an exhibit.
- Property with identifiers such as serial numbers, model numbers, or added components.
- Simple digital items or related rights that the seller can legally transfer.
Assets That Can’t Be Included
Some property requires different legal steps or isn’t transferable under this type of agreement.
- Real estate, which needs a separate property contract.
- Investment assets like stocks, bonds, or securities.
- Intellectual Property (IP) or contract rights that require assignments.
- Whole businesses or ownership interests.
- Services, since they aren’t property.
- Regulated assets that need licensing or approval.
- Property the seller doesn’t fully own, such as leased, borrowed, or jointly owned items.
- Business-owned assets when the individual seller lacks authority to sell them.
These limits keep the agreement focused on assets that can be transferred cleanly from seller to buyer.
If you’re debating whether an asset belongs here, learn how personal property is defined. It can save you from adding something that needs a different contract.
How to Draft an Asset Purchase Agreement
When putting together an asset purchase agreement, focus on the details that define the deal and the transfer. Begin by answering these questions. They outline the main parts of the contract.
- When was the agreement made? Record the date so the contract ties to a specific moment.
- Who is involved in the sale? List every buyer and seller with full legal names and addresses.
- What exactly is being sold? Describe each asset with identifiers, and use an exhibit if you’re listing multiple items.
- How much is the buyer paying? Enter the total purchase price clearly.
- When does the buyer take possession? Add the delivery or ownership-transfer date.
- How will the buyer pay? Note whether the payment is a lump sum or set on a schedule. Note any specific remedies for non-payment, such as repossession of the property.
- Does the seller legally own the asset? Include the seller’s confirmations about ownership and no liens.
- What condition is the asset in? Add the buyer’s acknowledgment of its condition at the time of transfer.
- Which state’s rules apply? Choose the governing law and the method for resolving disputes.
These questions guide you through each part of the agreement. They help you capture the full deal and support a clean transfer.
Asset Purchase Agreement Sample
View a sample asset purchase agreement to see how a completed one looks. Then use Legal Templates’s builder to customize your own and download it in PDF or Word.
