Terms of a Sale and Purchase Agreement

Abstract

Abstract This chapter is a ‘nuts and bolts’ analysis of some of the basic terms in a sale and purchase agreement, excluding the warranties which are discussed in Part II of this book. Many of these terms are the same as those in sale and purchase agreements used internationally, but they need to be properly understood in the light of PRC law and in the context of a PRC transaction. Sale and purchase agreements in China transactions are often prefaced by recitals describing the background to, and the purpose of, the agreement. Strictly speaking, the recitals are not legally binding, but there is no assurance that a People’s court would not ascribe a legal effect to the recitals It is customary in international practice to draft a sale and purchase agreement with an operative provision, namely, a clause where the Seller formally agrees to sell, and the Buyer agrees to buy, the subject matter in question.