Factors to Consider When drafting a purchase contract

Rate this post

A draft contract is a written agreement that is not yet finalized. The two parties who are yet to agree can go through a few drafts and negotiate before finalizing a contract. An agreement should safeguard your interest. 

Drafting a contract is an important step in contract management that includes writing down the conditions and terms of an agreement. Drafting a contract is the step-by-step insertion of specific needs, terms, and conditions. During drafting a purchase, the contract is that the document created is legal and settled between the two parties.

Always try to write more than one draft, pour out everything you have in mind, and it is allowed not to be perfect in the first draft. Then by drafting a second, third, or even a fourth draft, you will be able to source many ideas that you could have missed outsourcing during the first draft. Now look for errors, ambiguity, sentence structure, paragraphing, and so on. 

Before considering the factors to consider when drafting a contract, let’s look at what benefits come along just by drafting a purchase contract. 

  • Creates a common understanding of how you and your clients should act and what is best expected from them.
  • You can smoothly manage your team’s expectations if all of you are on the same page about everything.
  • Drafting a contract can help you mitigate risks, although not entirely.

Below is an outlined idea of factors to put in place while drafting a purchase contract.

Choose The Right Form.

Prioritize a written contract over a verbal contract. A well-drafted contract will ensure that the parties understand their rights and what is expected for them to be done. A written contract gives credit to your business security matters as it keeps the document to avoid misinterpretations in the future. 

On the other hand, a verbal contract has no terms set to keep the two parties abiding by the rules made. A verbal contract may lack evidence, be challenging to enforce, and become hard to interpret in a court of law.

Factors to Consider When drafting a purchase contract

Research On the Trading Company You Are Entering into A Contract With

An organization’s details are supposed to be accurate and true. Although there are instances where companies fake their details to please a contracting party, this can lead to complications later when you have already signed the contract. So, while drafting, make sure you get the details via different sources for your company to be on the safer side.

Be Specific 

Detailed contracts are a crucial thing to the protection of your company. In other words, avoid being ambiguous while drafting your contracts. Use clear, simple business-like languages. If you happen to use any technical terminologies, make sure you define them.


Trust is a vital step before making any contract agreements with any party. Having a trustworthy relationship between the involved parties is a stepping stone towards an organization’s success.


When drafting a business contract, be sure to keep it simple. Both parties must understand what is expected of them and make sure the contract contains simple terms using common terminologies. Make sure each clause does one thing, not more.

Deposits or Down Payments

Paying a deposit can be part of binding a contract. The ability to cancel a contract without loss of the deposit must be confirmed through writing. During a purchase drafting, make sure that you have an agreement with the other party that you will have your deposit back if you choose to cancel the deal.

Also, under deposits, ask certain questions like whether the price will be in cash or ownership of interests in the purchasing company.


Post-Closing Breaches

Also known as amends provisions. When drafting a purchase contract, make sure that both parties protect each other in terms of the deals made earlier and no breach of a company’s information. 

No Competition

The purchaser can consider non-competitive agreements from the vendor, and the vendor’s employees should safeguard the company’s value of assets bought.


The reason a company opts to estimate is that t helps an organization stay on budget. An estimate is signed by the person giving the estimation. If you sign the estimate, you are entering into an abiding contract, so you should consider if this is the company you want to do business with within the long run.

Predict The Possible Risks

While drafting a purchase contract, always predict disputes that may arise out of the contract in the future. Then keep in mind the possible solutions that you may use to cater to such risks.

Signing The Contract

Both parties are supposed to read the draft contract

 carefully and understand the terms and conditions. Always consult a lawyer if there is anything you feel you have doubts about or you don’t understand. After you have read everything and understood everything, proceed and sign the contract hence having a legal binding between the two parties. When drafting a purchase contract, you must reserve the final page of the contract for signatures and dates.

I have 15 Year experience in website development, blogging, Seo, Content writing, and Link building.

Leave a Comment

Ads Blocker Image Powered by Code Help Pro

Ads Blocker Detected!!!

We have detected that you are using extensions to block ads. Please support us by disabling these ads blocker.

Powered By
Best Wordpress Adblock Detecting Plugin | CHP Adblock