What To Include In A Purchase And Sale Agreement (Australia)

Whether you’re buying or selling a business, key assets or property interests, a clear, well-drafted purchase and sale agreement is what turns a handshake into a binding deal.

It’s also the document that protects you if something doesn’t go to plan.

If you’re feeling excited and a little overwhelmed, you’re not alone. The good news is that once you know the essentials to include (and the common traps to avoid), you can move forward with confidence and get your deal done the right way.

In this guide, we’ll break down what a purchase and sale agreement is, the clauses you should expect to see, the Australian laws and taxes to factor in, how long a contract of sale can remain enforceable, and the supporting documents that often sit alongside the main agreement.

What Is A Purchase And Sale Agreement?

A purchase and sale agreement (sometimes called a contract of sale or sale and purchase agreement) sets out the terms for transferring ownership of goods, assets, shares, or a business from a seller to a buyer.

It’s used for significant transactions such as:

• Buying or selling a business (asset sale or share sale)
• Transferring valuable equipment, vehicles, or bulk goods
• Agreeing terms to buy or sell intellectual property or customer lists
• Assigning or transferring interests tied to a business (for example, a lease or distribution rights)

For day-to-day purchases, a receipt or invoice may suffice. But once value and risk increase, a detailed written agreement is essential to clarify expectations, allocate risk and reduce the chance of a dispute later.

What To Include In A Purchase And Sale Agreement

Every contract should be tailored to the specific deal. However, the following clauses appear in most Australian purchase and sale agreements.

Parties And Capacity

Clearly identify the buyer and seller by their legal names and addresses. If a company is a party, include the ACN/ABN and the registered office. This ensures the right entity is binding itself to the deal (not the trading name or a related party).

Detailed Description Of What’s Being Sold

Spell out exactly what is included (and excluded). For tangible assets, list model or serial numbers, quantities and condition. For business transactions, specify whether it’s an asset sale or a share sale, and list categories such as stock, plant and equipment, contracts to be assigned, and intellectual property.

If used equipment or inventory is involved, it’s common to include condition reports or acceptance testing criteria. For secured assets, plan for the release of any registered security interests on the PPSR at or before settlement.

Purchase Price, Deposits And Payment Structure

Set out the total price, any deposit, and how and when the balance is payable (for example, a single payment on settlement, or staged/earn-out payments over time).

State clearly whether the price is inclusive or exclusive of GST. If the sale qualifies as a sale of a going concern or another GST treatment, note this expressly and make sure each party commits to the conditions necessary for that treatment to apply.

Adjustments And Apportionments

For business sales and asset deals tied to ongoing operations, it’s common to adjust for prepaid expenses, employee entitlements, rent, utilities, or stock valuation at completion. The agreement should explain how these amounts are calculated and who pays what at settlement.

Conditions Precedent (Turn The Contract “On”)

Conditions precedent are things that must happen before the deal becomes unconditional or can settle. Examples include buyer finance approval, satisfactory due diligence, franchisor or landlord consent, third-party approvals, or competition/industry approvals for larger deals.

The clause should be specific about timelines, who must do what to satisfy each condition, and what happens if a condition isn’t met (for example, rights to terminate and get the deposit back).

Warranties, Representations And Disclosures

Warranties are promises-often from the seller-about title, ownership, encumbrances, financial statements, compliance and more. Any disclosures against those warranties (for example, known defects or liabilities) should be captured in a disclosure letter or schedule.

Misleading statements can result in legal claims under the Australian Consumer Law (ACL). Keep representations accurate and align your advertising and negotiations with the contract to minimise risk under section 18 (misleading or deceptive conduct).

Due Diligence And Access

Allow the buyer access to financials, key contracts, IP registrations, and physical assets for a defined due diligence period. The clause should manage confidentiality, scope, and what happens if due diligence is not satisfactory.

Contracts And Rights Being Assigned

If customer, supplier, lease or licence agreements are part of the sale, your contract should explain how assignments or novations will occur and who must obtain consents. It’s a good idea to set out the process for any assignment of contracts and allocate responsibility for fees or landlord/franchisor requirements.

Intellectual Property

List the trade marks, domain names, copyrights, designs or other IP to be transferred and how ownership will pass at settlement. Include transitional licences if needed. For formal transfers, you may also need stand‑alone instruments and filings in addition to the contract (for example, recordal at IP Australia for trade marks).

Settlement, Handover And Completion Mechanics

Set the settlement date, steps to complete, and which documents and deliverables are exchanged (for example, IP assignment instruments, keys, access codes, releases of security, hard drives or customer lists).

Outline the settlement venue or process (including virtual closing), any escrow or retention arrangements, and what happens if completion is delayed (interest, extension rights, or termination).

Risk, Title, Insurance And Security Releases

State when risk and title pass. In many deals, risk passes on completion and not before. If there are existing security interests, include a clean process for releases and PPSR discharge prior to or at settlement. Confirm who must insure the assets between signing and completion.

Employee And Operational Matters (Business Sales)

Cover how employees are handled (offers of employment, continuity of service, accrued leave adjustments and which party bears the cost). Include operational handover matters-like transferring software subscriptions, passwords and key operational documents-so the buyer can continue trading.

Restraints And Non‑Solicitation

In business sales, restraint clauses help protect goodwill by limiting the seller’s ability to compete, poach staff or solicit customers for a defined period and area. These must be reasonable to be enforceable in Australia and are often drafted in a cascading format to improve the chances of being upheld.

Confidentiality

Include confidentiality obligations to protect sensitive financials, trade secrets and deal terms-both during negotiations and after completion. A separate NDA is also common at the start of discussions.

Disputes, Remedies And Liability Caps

Set out how disputes will be resolved (for example, good-faith negotiation, mediation, then court if needed) and whether there are limits on liability, indemnities, holdbacks or special remedies for certain breaches. Agreeing a governing law and jurisdiction for disputes is also important.

Execution And Electronic Signatures

Make sure the contract is signed correctly by each party (or their authorised signatories). In Australia, electronic signatures are generally acceptable when the requirements are met. For company signings, consider the practicalities explained in wet ink vs electronic signatures.

Special Note On Real Property

Real estate transactions often use prescribed or industry-standard forms and can involve state-based conveyancing requirements. If your deal includes the transfer of land or interests in land, you’ll usually need a property lawyer or licensed conveyancer to handle those parts alongside the commercial terms. Our focus here is on commercial sale terms-property-specific compliance may require separate documents and processes.

Australian Law: Compliance, Taxes And Special Rules

Your contract needs to do more than set out commercial terms-it also needs to align with Australian laws that apply to the deal.

Australian Consumer Law (ACL)

If the transaction involves consumers, ensure representations are accurate, warranties align with consumer guarantees, and your advertising isn’t misleading. The ACL applies broadly to goods and services supplied in trade or commerce, and misleading conduct risk extends to pre‑contract statements and negotiations.

Company And Contract Law Basics

Check that each party has authority to sign, that board or shareholder approvals (if needed) are obtained, and that the agreement reflects the deal you intend to make. If you execute a document as a deed rather than a simple contract, different formality and enforcement rules apply-see this overview of what is a deed.

Licences, Third‑Party Consents And Industry Rules

Some sales require regulatory approvals (for example, franchising consents, industry licences, or landlord approvals). Build these into your conditions precedent and set realistic timeframes to obtain them.

Intellectual Property Transfers

For deals involving trade marks, domains and other IP, note any registration, assignment and recordal steps (and timing). The contract should obligate each party to sign any additional documents necessary to perfect the transfer and maintain chain of title.

Tax: GST, Stamp Duty And “Going Concern”

State whether the price is GST-inclusive or exclusive and who is responsible for any taxes. Some business sales can be treated as GST‑free as a sale of a going concern if strict conditions are met. Depending on the jurisdiction and asset class, stamp duty (transfer duty) can also apply-particularly with real property or certain business assets in some states. It’s important to obtain tax advice alongside your legal review so the contract reflects the intended tax treatment.

How Long Does A Contract Of Sale Stay Valid?

Your contract remains in force until it’s completed, expires, or is validly terminated (for example, if a condition precedent isn’t satisfied or a material breach occurs). After completion, some obligations continue, such as restraints, confidentiality and indemnities, if the agreement says so.

Limitation periods for bringing claims depend on the type of document and the jurisdiction. As a general guide, simple contract claims often have a six‑year limitation period, while claims under a deed can have a longer period (commonly up to 12 years in many states). Time limits can vary, so it’s wise to seek specific advice for your situation.

Essential Supporting Documents

The main agreement is only one part of a smooth transaction. Depending on your deal, you may also need:

• NDA (Confidentiality Agreement): Protects sensitive information during negotiations and due diligence. Many parties start with an NDA before sharing detailed financials or IP.
• Asset Or Share Sale Documents: Business deals are usually structured as an asset sale or a share sale-each has different risk, tax and transfer steps. This comparison of share sale vs asset sale explains the key differences.
• Assignments/Novations: If key contracts are moving with the sale, you’ll typically need stand‑alone assignments or novations in addition to the main contract. This is especially important where customer or landlord consent is required, as covered in assignment of contracts.
• IP Transfer Instruments: Trade mark assignments, domain transfers, copyright assignments and any filings needed to perfect the transfer at IP Australia or registrars.
• Security Releases: PPSR discharges and lender releases to ensure assets are transferred free of encumbrances on settlement.
• Employment Documents: If employees are transferring, prepare offers of employment and any deeds or policies you require in the new structure.
• Execution Versions: Final versions in a signable format and a plan for valid electronic execution if signing remotely (see wet ink vs electronic signatures for what’s acceptable).

Practical Tips And Common Pitfalls

• Be specific about inclusions and exclusions: Ambiguity about what’s being sold is a top cause of disputes.
• Document pre‑contract promises: If it matters, put it in the contract-don’t rely on verbal assurances.
• Plan for consents early: Landlord, franchisor and key customer consents can take time. Build realistic timelines into the contract.
• Align tax and legal steps: Ensure the GST position (and any going concern treatment) is reflected in the contract and your completion checklist.
• Don’t forget security releases: Ensure all PPSR registrations are discharged so you actually receive clean title on settlement.
• Use the right structure: Consider whether your deal is better as an asset sale or share sale. The contract terms, risk profile and completion steps can differ materially, which is why understanding share sale vs asset sale is helpful before you sign.

Key Takeaways

• A purchase and sale agreement records exactly what’s being sold, for how much, on what terms, and with which risk allocations-reducing the chance of disputes.
• Include clear descriptions of the assets or shares, price and adjustments, conditions precedent, warranties and disclosures, consents and assignments, settlement mechanics, restraints, and dispute provisions.
• Make sure your contract aligns with Australian law, including the ACL, any licence or third‑party consent requirements, and the correct tax position (GST, going concern and any applicable stamp duty).
• Limitation periods continue after completion for a period set by law and the agreement; deeds usually carry longer limitation periods than simple contracts.
• Support the main agreement with NDAs, IP transfer instruments, contract assignments/novations and PPSR discharges, and plan execution (including valid e‑signing) ahead of time.
• Real property transfers often require prescribed conveyancing documents-engage the right professionals for property components alongside your commercial sale terms.

If you would like a consultation on preparing or reviewing your purchase and sale agreement, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.