What are three major pitfalls in writing a purchase contract?

Do not do contracts verbal and a handshake this could get you in hot water.

" If you’re doing deals without at least a purchase order and an invoice, you’re heading for trouble. Have a look at each and every transaction where a person supplies you with goods or services, or where you supply goods or services, and make sure there is a paper trail showing the business that you have done. 

Every contract is negotiable. You’re about to hand over your hard earned cash. You have every right to negotiate the terms . I recommend that you amend certain clauses in your contracts, which you most certainly can do.

Read every page amend it as needed. If you do not understand a particular passages, seek advice to make sure your rights are properly protected."

 

 

If you run your own business, you enter into contracts all the time. Whether you realise it or not, contracts are a major part of what your business does day to day. You entered into a contract when you leased your premises. You entered into a contract when you purchased your stationery. You entered into a contract when you hired your first employee. Contracts are a fact of life in business. One of the most important skills you can learn in business is how to get a contract right. An important part of getting a contract right is learning from the failures of others. Here’s a few, for starters. "We do business on a wink and a handshake" Not any more. The only way you can make sure you’re covered if things go awry is if you have everything in writing. If you’re doing deals without at least a purchase order and an invoice, you’re heading for trouble. Have a look at each and every transaction where a person supplies you with goods or services, or where you supply goods or services, and make sure there is a paper trail showing the business that you have done. Murphy’s Law dictates that it will be your biggest transaction that comes back to bite you if you don’t. Get contracts in place for any ongoing transactions. A properly drafted contract will protect your rights and give you a leg to stand on if the other party decides to go off book. It is just as important to make sure that if the scope of your agreement changes, you vary the contract in writing. A common story I hear from clients is that "we had a fixed price contract, and then he asked me to do extras and said he would pay me by the metre/hour." Well, unfortunately that’s not what the contract says, and while they may have done significantly more work than what is stipulated in the contract, those clients will have an uphill battle to get paid anything over the contract price. "It’s a standard form contract" Standard form contracts are often produced by industry or government bodies for use within a particular industry. Standards Australia, for example, produces a number of contracts for various different transactions. The tip here is that just because it is a “standard form” contract does not mean it reflects the terms on which you intended to contract with the other party. It also does not mean that the contract is not weighted in favour of one party or another. Standard form contracts can still contain provisions which are not in your best interests. Read every clause and think about whether you are comfortable with it. If not, speak to the other party about removing or changing it. "This contract is not negotiable" Every contract is negotiable. You’re about to hand over your hard earned cash. You have every right to negotiate the terms under which you do that. I recommend that you amend certain clauses in your contracts, which you most certainly can do. Read every page (yes, every page) and make sure that you are comfortable with the contract and how it operates. If you are not happy with a particular clause, negotiate to have it changed or removed. If you do not understand a particular clause, seek advice to make sure your rights are properly protected.

The biggest pitfall is not to foresee any lack of dates, prices, incoterms, quantities, dead-lines etc., by applying a related clause.

Not applying a clause in a contract doesn't show any good will but shows a lack of professionalism. 

Second pitfall might be missing official records of the two or more parties. This could lead to an unending court case.

Third pitfall is the buyer to sign first the contract. Since an agreement is achieved, vendor's signature must be on the hardcopy first.

This are the basics and apply to any type of contract and industry.

There are a lot more to take care, depending the the nature of the contract (materials/services) the industry (construction/FMCG/manufacturing etc.) or the nature of the vendor (strategic/indirect etc.)

 

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I'm assuming you're talking about the process of buying, once you've found a place you actually want to buy. (As distinct from the pitfalls of looking for an apartment in the first place, or the pitfalls of owning an apartment once you've bought it.) What I've written here is based on my experience and that of friends who have bought over the past ten years or so.As with many things, it will be impossible if you don't speak French! If your French isn't really fluent you should definitely get someone to interpret/translate for you. The legal language of the various documents is difficult for native speakers, let alone foreigners. The negotiating process is closer to that in the US than in, for example, the UK: you offer a bit less than the asking price, and the owners can make a counter-offer or reject yours outright. For example, when I bought (through an agency), I proposed about 93% of the asking price, the agent told me that they had already rejected an offer at that price, I went up to 95% and they accepted it immediately. (I'm not saying that all sales are that quick and easy!)  Then there's an initial agreement you both sign, which simply takes the property off the market until the "promesse de vente" can be drawn up and signed a week or two later. The "promesse" is the equivalent of a P&S agreement in the US. This includes any conditions stipulated by either side, and is accompanied by a down-payment, usually of 10%. Now comes the first (potential) pitfall: in Paris, the city has the right to pre-empt the purchase of any property and buy it for public purposes of some kind. For instance, a building may be getting converted to social housing, a school, or whatever: the city won't evict the current owners but as apartments become empty it will buy them up. Note that (a) this doesn't often happen, and (b) in practice it will already be known, so the owners won't even bother putting it on the market. But in order for the vetting process to be gone through, there is a mandatory waiting period of two to three months between the promesse de vente (when the city is notified) and the actual sale (after the city formally says it's not interested). You need to allow for this time lag in your moving-in plans. (For instance, in the year I bought, I signed the promesse de vente at the end of July and signed the "acte de vente" to take possession in late October.)  Property can be bought through a real estate agency or directly from the owners ("particulier a particulier").  In principle sale-by-owner properties cost a bit less because the sellers aren't paying an agency fee; however, the  hassle of negotiating directly if you aren't fluent in French (and even if you are) may not be worth it. (A friend of mine was assured by the seller that the top-floor apartment included ownership of the building's roof terrace; it was only when the notaire looked into the title that she found this was a complete lie.) As a newcomer to Paris I also found the agency tremendously helpful in explaining the process to me, plus recommending an insurance company, notaire, and so on.Either way, a second pitfall (compared to the US) is that the buyer pays the so-called "frais de notaire" - fees covering the actual legal work of verifying title, drawing up the  deed of sale, and so on, plus VAT. These fees are currently in the range of 7-8% of the sale price on an apartment more than 5 years old (true for most Paris property). So if for example you buy an apartment for 500,000 euros, you'll have an additional bill of 35-40,000, due on the day of signing the "acte de vente" and taking possession.  You may also find that you already owe management/maintenance costs to the building, depending on how the transfer from the previous owners has been calculated. You're required to have insurance on the property, which you have to put in place before you can sign the "acte de vente". This will add another thousand or more upfront to the initial costs.Having said all that, I'd say that comparatively speaking the process is pretty transparent, and the associated costs are regulated and easy to calculate. Buying in Paris is infinitely easier than renting!

Highly Appreciate Elke Woofter Answer 

I will keep this concise as other have answered in great detail:

3 pitfalls:

 

requirements not clearly defined

Pricing And Payment terms not clearly defined

ensuring there is a form of agreement so the buyers contract is in force not the suppliers

 

full agree with great answers above

 

Agree with Mr. ACHMAD SURJANI<<<<<<<<<<<<<<<<<<<<<,

Usually following things a buyer can miss out while writing purchase contract: 1) +/- Qty tolerances allowed 2) what if the actual weighment received is beyond the weighbridge tolerance on -ve side. 3) what if the desired quality of material is not received 4) contract termination clause 5) in case of imports, what if the shipping documents do not reach us in time, who will bear the detention charges 6) if the lab results of buyer and seller labs are different, how sampling and analysis should be done Etc...

1) price, quantity, delivery schedule; penalties for non delivery

2) quality assurance / service level / acceptance protocol (all related process and procedures); penalties

3) stock protection, payment terms, early payment discounts, applicable law

I leave the answer to the experts, specialists in this field