General (Goods) Purchase Agreement
Selling a car, equipment, or other property? A purchase agreement is the contract that locks in the sale: the price, the payment, and when title passes. It does more than a bill of sale, and it works in all 50 states.
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A purchase agreement is the contract that sets the terms for selling property, most often goods or personal property like a vehicle, equipment, or furniture. As the seller, you use it to put the deal in writing: the goods, the price, how the buyer pays, and when title passes. It binds both sides once you and the buyer sign, and it does more than a bill of sale alone. Either party can draft it, but the seller often does. It is not the same as a bill of sale. The agreement sets the terms before the sale; the bill of sale is the receipt at closing.
Key Takeaways
- It sets the full deal: the goods, the price, the payment, and when title passes.
- It is more than a receipt: a bill of sale proves the transfer; this agreement sets the terms first.
- You can sell on terms: take full payment, a deposit and balance, or installments over time.
- Keep a security interest if you finance it: a lien lets you take the goods back if the buyer defaults.
- Sell as is, but disclose: an as-is sale limits your liability, but you still cannot hide a known defect.
6 steps to write a purchase agreement
The whole job, start to done.
- 1
Name the parties and the goods
Identify yourself as the seller, name the buyer, and describe the goods in enough detail to be unmistakable. Add serial or VIN numbers where the goods have them.
- 2
Set the price and the tax
State the purchase price, and say who pays any sales or use tax. Being clear here avoids a fight at closing.
- 3
Choose how the buyer pays
Decide between payment in full, a deposit plus the balance, or installments. If you finance it, keep a security interest in the goods until you are paid.
- 4
Set closing and delivery
Fix the closing date and whether the buyer picks up, you deliver, or you ship. Say who pays for shipping and who insures the goods in transit.
- 5
Set title, risk, and your representations
State when title and risk of loss pass, and sell the goods as is unless you agree otherwise. Represent that you own the goods and have disclosed known defects.
- 6
Sign and hand over a bill of sale
Both sign the agreement, and give the buyer a bill of sale at closing as the receipt. Keep a copy of each for your records.
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Most popularWhat if it's not that simple?
The situations that actually trip people up.
What if the buyer pays over time and then stops?
Your security interest is what protects you. If you kept a lien and filed it, you can repossess the goods and resell them under the UCC. Without a lien, you are just an unsecured creditor.
What if the goods are damaged before the buyer gets them?
Risk of loss decides who pays. If it passes on delivery, the loss is yours until the buyer receives the goods. Insure them until then, and say so in the agreement.
Do I owe sales tax on a private sale?
Often the buyer pays it at registration, not you. But it depends on the goods and your state. Say in the agreement who is responsible.
What if the buyer finds a defect after the sale?
An as-is sale limits your liability for condition. It does not cover a defect you knew about and hid. Disclose what you know, and keep proof that you did.
How a purchase agreement works
A purchase agreement is the contract that sells your property. You and the buyer agree on the goods, the price, and the terms, and the deal binds both sides once you sign. It sets when the buyer pays, when title passes, and who carries the risk until then.
How the buyer pays is the heart of the deal. The buyer can pay in full at closing, put down a deposit and pay the rest at closing, or pay you in installments. If you let the buyer pay over time, keep a security interest in the goods until you are paid in full. That lien is what lets you take the goods back if the buyer defaults.
Title and risk do not pass at the same moment. Title passes on delivery, subject to any security interest you keep. Risk of loss passes when the buyer receives the goods. Say who insures the goods until then, especially if you ship them.
What you promise about the goods decides your exposure. Most private sales are as is, with no warranty of condition. But you still represent that you own the goods, can sell them, and have disclosed known defects. Hiding a defect can undo the sale, as-is or not.
A purchase agreement is not a bill of sale. The purchase agreement sets the terms before the sale; the bill of sale is the receipt you hand over at closing. Use both: the agreement to strike the deal, the bill of sale to prove the transfer. The table below shows which does what.
What it includes
· The parties: you, the buyer, and the effective date.
· The goods: what is being sold, and where it is located.
· The price and tax: the purchase price, and who pays any sales or use tax.
· The payment terms: paid in full, a deposit plus balance, or installments with a security interest.
· Title and risk of loss: when ownership and risk pass to the buyer.
· Seller's representations: clear title, authority to sell, and disclosed defects.
Purchase agreement vs. bill of sale
Both document a sale, but they do different jobs, and most deals use both.
| Purchase agreement | Bill of sale | |
|---|---|---|
| What it is | A contract that sets the terms of the sale | A receipt that proves the transfer |
| When it is used | Before the sale, to agree the deal | At closing, to hand over ownership |
| What it covers | Price, payment, title, risk, representations | The item, the price paid, the date |
| Is it binding? | Yes, it is the binding contract | Yes, but it records a sale already made |
| Best for | Installment sales, bigger deals, terms to negotiate | Simple, paid-in-full sales |
| Used together? | Strike the deal here first | Attach at closing as the receipt |
General (Goods) purchase agreement FAQs
Is a purchase agreement the same as a bill of sale?+
Who writes the purchase agreement?+
Is it legally binding?+
Can I sell goods on an installment plan?+
What does “as is” mean?+
Does it need to be notarized?+
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