A purchase contract, or purchase agreement, is a legally binding contract between a purchaser (e.g. a retailer) and a seller (e.g. a wholesaler). The contract transfers the ownership of products from a seller to a buyer and outlines the different terms and conditions related to the sale of the products.
Purchase contracts are commonly used for a variety of transactions, though usually for the sale and purchase of goods rather than services. The contract is used to achieve specific outcomes at various stages of the eCommerce supply chain.
If you’re looking for a professional purchase contract template, we’ll be sharing one later in this post.
Features included in a purchase contract
The details of a purchase contract will depend on the local laws governing an agreement that is struck, as well as the executing parties of the agreement. The contract should include any and all information that is relevant to the transaction.
To make sure that your purchase contract is well-written, you should include all details necessary to avoid misunderstandings regarding any aspect of the transaction. A purchase contract may contain:
- The name or company name of the seller and the name or company name of the buyer
- The contact details of the seller and the buyer, including (company) addresses, and phone numbers
- The products or goods involved,
- The quantities and prices of the goods,
- The date of the agreement,
- The terms of delivery,
- The dates for fulfillment of any conditions or requirements, and
- Whether or not the agreement can be amended, modified, or revised.
The section on amendments, modifications, or revisions is included in most purchase contracts to show that the seller is equitable and wants the buyer to feel comfortable working with them. The buyer always has the right not to sign a contract whose requests they don’t feel comfortable agreeing to.
As the seller, it’s naturally in your best interest to make a contract that your buyer will be comfortable signing. We recommend that you contact an experienced commercial attorney with any questions you may have regarding the requests you make in your purchase agreement.
Purchase contract breaches and remedies for purchase contract violations
Either party to a purchase contract – i.e. the seller and the buyer – can breach the contract. Here are some examples of contract breaches:
- Failure to deliver the goods on time,
- Delivery of the wrong type of goods,
- Last-minute sale of the goods to another party,
- Failure to make full payment(s),
- Refusal to complete the purchase, and/or
- Fraud committed by either party.
In most cases of purchase contract litigation, courts will review the original terms of purchase to determine whether or not there has been a breach.
If the contract is breached, remedies are available. Remedies can be legal – monetary damages for the non-breaching party – or equitable – non-monetary solutions to resolve the dispute.
The remedies are determined by several factors, including contract laws of the state, the agreement terms, and/or the facts surrounding the contract violation.
To minimize the risk of a contract breach, make sure to uphold your end of the contract. Know your responsibilities, and have your purchase agreement approved by a commercial attorney before your buyer signs it.
Download purchase contract template
As promised, we include a complete purchase contract template containing the features listed above.