Pay for the equipment you need, when you need it.
Buying or selling significant agricultural machinery—a new combine, a high-horsepower tractor, or a precision planter—is a massive transaction. While a handshake and a verbal agreement might feel sufficient, especially within tight-knit farming communities, the financial stakes are too high to skip the security of a written Equipment Purchase Agreement for farm machinery purchases.
This isn't just another piece of annoying red tape; a purchase agreement is a vital tool for risk management and financial protection, particularly in a third party purchase where relationships may be less established.
An Equipment Purchase Agreement is a legally binding contract between a buyer and a seller for the transfer of specific machinery.
It goes far beyond a simple bill of sale by comprehensively detailing the entire transaction. Essentially, it serves as the definitive roadmap for the equipment purchase or sale, ensuring every aspect is documented and agreed upon before money and property change hands.
Whether you are the buyer or the seller, an Equipment Purchase Agreement protects your interests, especially when dealing with a third party purchase like an auction or private sale.
It is a critical step in equipment financing processes:
For the Buyer: It guarantees that the equipment you receive is the exact make, model, condition, and price you agreed to. It secures your equipment loan and locks in the warranty terms.
For the Seller: It confirms the payment amount, the schedule for receiving funds, and clarifies when the buyer assumes responsibility for the equipment, minimizing liability risks after the sale.
A properly executed Equipment Purchase Agreement is your first line of defense against misunderstandings, defects, and non-payment.
The legal power of the agreement stems from contract law, giving farmers specific legal and financial security. This protection is amplified in a third party purchase scenario, where you might have limited prior knowledge of the seller or the equipment's history.
Key protections afforded by a purchase agreement include:
Clarity on Specifications and Condition: The agreement details the machine's condition (e.g., used, current hours, serial number) and included attachments, preventing disputes if the delivered farm equipment is not as advertised.
Legal Recourse if Terms are Broken: Since the agreement is signed and in writing, you have the legal proof needed to recover costs (damages) or ensure the sale is completed if the other party violates the terms.
Clear Transfer of Title and Ownership: It formalizes the ownership transfer, ensuring the buyer receives the ag equipment free of any undisclosed liens or encumbrances and confirming the seller is the rightful owner—a critical check in any third party purchase.
Risk Transfer and Mitigation: The contract establishes a clear point where ownership and the risk of loss or damage are transferred from the seller to the buyer, protecting both parties from liability for unforeseen events.
Warranty Enforcement: The agreement defines and legally binds the parties to the manufacturer's warranty or any specific guarantees offered by the seller, making them enforceable.
A robust agreement typically includes these essential components:
Buyer and Seller Contact Info: Full legal names and addresses of both the buyer and the seller.
Complete Equipment Details: Make, model, year, serial number, current hours/mileage, and a list of included implements/attachments.
Price and Payment Plan: The final sale price, deposits, installment schedules, and acceptable payment methods.
Handover and Delivery Plan: When and where the title transfer will occur, and who is responsible for transportation costs and logistics.
Equipment Guarantees and Condition: Explicit statements about the equipment’s condition and operational status. For used equipment, this is often where an "as-is" disclaimer is included.
What Happens if the Deal Falls Apart: What happens if either party fails to meet the terms of the contract.
Don't leave your next major equipment deal to chance. Having a comprehensive agreement document is the cornerstone of a secure transaction, particularly in a potentially complex third party purchase.
FBN Finance offers an easy-to-use, downloadable Equipment Purchase Agreement template in PDF format, designed specifically for farm equipment, that can give you peace of mind and full legal protection when you buy or sell ag machinery.
Download the PDF template here.
Once you have your agreement in place, the next step is equipment financing for your investment. FBN Finance offers flexible equipment loans, including for third party purchase transactions, auctions, or dealerships.
FBN Finance offers a simplified application process, competitive interest rates, and quick approval times, allowing you to secure the machinery you need with less hassle and a reliable financing partner.
Learn more and apply for an equipment loan from FBN Finance here.
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The material provided is for information purposes only. It is not intended to be a substitute for specific professional advice. Neither Farmer’s Business Network nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in the material and any liability therefore is expressly disclaimed.
Financing offered by FBN Finance, LLC and its lending partners. Available where FBN Finance, LLC is licensed. Terms and conditions apply. To qualify, a borrower must be a member of Farmer’s Business Network, Inc. and meet all underwriting requirements. Interest rates and fees will vary depending on your individual situation. Not all applicants will qualify. NMLS ID: 1631119.