AI Purchase Agreement Generator

A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions of a sale. It specifies what is being sold, the purchase price, payment terms, conditions that must be met before closing, representations and warranties by both parties, and the procedures for completing the transaction. It serves as the definitive document governing the entire purchase transaction.

Representations are statements of fact about the current state of affairs (such as ownership of assets, no pending litigation, accuracy of financial statements). Warranties are promises that these statements will remain true through closing. They allocate risk between the parties — if a representation turns out to be false, the other party may have remedies including indemnification, price adjustment, or the right to terminate the agreement.

Conditions precedent are requirements that must be satisfied before the transaction can close. Common conditions include satisfactory completion of due diligence, obtaining necessary regulatory approvals, securing financing, third-party consents (such as landlord consent for lease assignments), no material adverse changes in the business, and accuracy of representations at closing. Either party may walk away if conditions are not met by the closing deadline.

Indemnification provisions allocate liability for losses that arise after closing from breaches of representations, warranties, or covenants. The seller typically indemnifies the buyer for undisclosed liabilities, inaccurate representations, and pre-closing obligations. Indemnification terms usually include caps on total liability, deductible or basket amounts, time limitations for bringing claims, and escrow arrangements to fund potential claims.

The period between signing and closing (known as the interim period) involves fulfilling conditions precedent, obtaining required approvals and consents, completing any remaining due diligence, securing financing, preparing closing documents, and conducting a final pre-closing verification. During this period, the seller typically operates the business in the ordinary course and refrains from unusual transactions without buyer consent.