What It Does
A purchase agreement decides what you bought, and most of that answer sits outside the price line. For in-house counsel, the real work is in five places: what the granting clause names, how the headline price adjusts before it gets wired, which liabilities move with the deal and which stay behind, what conditions let either side walk before closing, and how long a buyer can bring a claim once closing is done. A practical test: read the granting clause against the excluded liabilities schedule, and if you cannot tell what stayed with the seller, the drafting has not done its job.
Defines the transferred property, naming in the granting clause the assets, equity, land, goods, or securities that move, so anything outside that description stays with the seller
Fixes the price and the mechanic that moves it, pairing a headline number with adjustments for working capital, debt, transaction expenses, and closing timing
Allocates liabilities, deciding through assumed liabilities, excluded liabilities, and indemnities which obligations follow the property to the buyer and which stay behind
Sets the conditions to closing, using bring-down conditions, consents, regulatory approvals, and material adverse change tests to give each side a defined right to walk before the transfer completes
Establishes post-closing recourse, using survival periods, escrows, holdbacks, caps, and baskets to determine how long a buyer can bring a claim and what it can recover
Purchase agreements in recent SEC filings continue to pair a negotiated price with a post-closing true-up and a defined survival regime, which keeps the real allocation of risk in the sections after the price.
When You'll See It
Mergers and acquisitions: An asset purchase agreement transfers named assets and named liabilities. A stock or equity purchase agreement transfers ownership of the entity, which carries the entity's liabilities with it by operation of the transfer.
Real property: A purchase and sale agreement covers land, improvements, fixtures, and related rights, and it typically runs through escrow with a deposit, a title and survey review period, and an inspection period.
Equipment and goods: Equipment and supply purchase agreements move machinery, inventory, or a defined volume of goods, and they sit against Article 2 of the Uniform Commercial Code as adopted in the governing state.
Securities financings: A securities purchase agreement documents the issuance and sale of shares, notes, or warrants to named investors, with closing conditions keyed to the accuracy of each side's representations as of the closing date.
A purchase agreement is a negotiated contract for a defined transfer. A purchase order is an ordering document that names quantity, price, delivery, and destination for a specific shipment, and it draws its legal terms from a master agreement, a set of standard terms, or the default rules that apply when the parties did not agree on terms.
The distinction matters when the forms disagree. Where a buyer's purchase order and a seller's acknowledgment carry conflicting terms and the transaction involves goods, Section 2-207 of the Uniform Commercial Code as adopted in the governing state decides which terms enter the contract, and the terms that conflict can drop out in favor of the code's own defaults.
For in-house teams, the practical rule is that a purchase order works for repeat ordering under terms someone already negotiated. A purchase agreement is the right instrument when the transfer is one-time, the property is specific, and the parties need to allocate liability, condition the closing, and set post-closing recourse.
Examples
Crimson Wine Group
Asset Purchase Agreement
Asset purchase granting clause
One-Sided
2026
Subject to the terms and conditions set forth herein, Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase from Seller, all of Seller's right, title and interest in the following, free and clear of any mortgage, pledge, lien, charge, security interest, claim or other encumbrance ("Encumbrance") ... Subject to the terms and conditions set forth herein, Buyer shall assume only the liabilities of Seller set forth on Schedule 1.02 (collectively, the "Assumed Liabilities"), and no other liabilities.
Asure Software
Equity Purchase Agreement
Equity purchase price adjustment
One-Sided
2025
The aggregate purchase price for the Purchased Interests shall be $39,500,000.00, subject to adjustment pursuant to Section 2.04 hereof (the "Purchase Price"). ... Within ninety (90) days after the Closing Date, Buyer shall prepare and deliver to Seller a statement setting forth its calculation of Closing Working Capital, which statement shall contain an audited balance sheet of the Company as of the Closing Date (without giving effect to the transactions contemplated herein)
Establishment Labs Holdings
Securities Purchase Agreement
Securities purchase bring-down condition
One-Sided
2024
The representations and warranties made by the Company in Section 4 hereof shall be true and correct in all material respects, except for those representation and warranties qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects, as of the date hereof and as of the Closing Date, as though made on and as of such date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such earlier date.
Plug Power
Purchase and Sale Agreement and Joint Escrow Instructions
Real property purchase and sale clause
One-Sided
2026
Upon and subject to the terms and conditions set forth in this Agreement, Seller agrees to sell and convey the Property to Purchaser and Purchaser agrees to purchase the Property.
Mammoth Energy Services
Equipment Purchase Agreement
Equipment purchase price allocation
One-Sided
2025
Buyer shall pay to Sellers the total amount of FIFTEEN MILLION AND 00/100 DOLLARS ($15,000,000.00) (the "Purchase Price"), for the Equipment, with EIGHT MILLION FOUR HUNDRED THOUSAND AND 00/100 DOLLARS ($8,400,000.00) allocated to the Stingray Equipment, and SIX MILLION SIX HUNDRED THOUSAND AND 00/100 DOLLARS allocated to the MEL Equipment.
Negotiate
Draw the liability line in the operative text. Push for an excluded liabilities clause that names the categories you refuse to take, and pair it with a closed schedule of assumed liabilities.
Tie the price to a measured balance sheet. Ask for a post-closing true-up against a defined working capital target, with the accounting principles named and a dispute path to an independent accountant.
Hold a bring-down condition at closing. Require the seller's representations to be accurate at signing and at closing, with a materiality standard you can live with and an officer's certificate confirming it.
Size the recourse to the diligence gaps. Where diligence left open questions, ask for a special indemnity with its own survival period and its own cap, separate from the general indemnity.
Keep an escrow or holdback in place. A funded escrow gives you a source of payment that does not depend on chasing a seller who has already distributed proceeds.
Close the survival window. Push for short survival on general representations, with fundamental representations carved out at a longer period, and confirm whether covenants that contemplate performance after closing are treated separately.
Cap and basket the exposure. Ask for an aggregate cap, a deductible or threshold basket, and a materiality scrape that runs one direction only.
Make the escrow the exclusive remedy. Where the parties fund an escrow, negotiate for it to be the sole source of recovery for general representation claims, subject to the standard fraud carve-out.
Tighten the closing conditions. Narrow any material adverse change definition with carve-outs for industry conditions, economic conditions, and changes in law, and require disproportionate effect before the condition can be invoked.
Bound the adjustment. Ask for a collar on the working capital true-up, a fixed review period, and a defined scope for the accountant so the dispute stays about arithmetic.
Purchase agreements reward teams that arrive with their positions already written down. Loading your negotiated survival periods, cap structures, and adjustment language into Playbooks means the next asset purchase agreement comes back marked against the terms your team already approved, and reviewing it through GC AI for Word keeps that comparison inside the document you are redlining.
Red Flags
Assumed liabilities defined by reference to a schedule you have not seen. An open-ended schedule turns a carefully drafted excluded liabilities clause into a promise with no boundary.
A purchase price with no adjustment mechanic in a deal that signs and closes apart. The target's balance sheet moves between signing and closing, and a fixed price hands that movement to one side.
Survival that terminates at closing. Some agreements provide that representations and warranties do not survive the closing at all, which leaves the buyer with limited contractual recourse absent a separate indemnity or an insurance policy.
A material adverse change definition with carve-outs and no disproportionate effect qualifier. Broad carve-outs can make the condition close to unusable for the buyer.
Anti-assignment provisions in the contracts being transferred. In an asset deal, a contract that prohibits assignment without consent may need a counterparty consent before it moves, and the agreement should say who bears that risk.
Silence on bulk sales, tax clearance, and successor liability exposure. State doctrines can attach certain obligations to a buyer of assets regardless of the contract language, so confirm the position under the governing state's law.
An escrow with no defined release date or claim procedure. Money set aside without a release mechanic becomes a negotiation of its own after closing.
FAQs
This content is for informational purposes only and does not constitute legal advice.
