A purchase agreement is one of the most common types of contracts we come across in life. Whether you’re buying a flat, a car, a business, or a piece of art – if the contract isn’t set up properly, the risk might only become clear once it’s too late. Let’s look at purchase agreements from a practical perspective – without legalese, but with a focus on what really matters.

What is a purchase agreement under Czech law

The Czech Civil Code (Section 2079 and following) defines a purchase agreement as a contract where the seller agrees to transfer an item and allow the buyer to acquire ownership, while the buyer agrees to pay the purchase price.

Sounds like a simple “money-for-goods” deal – but legally, it’s a bundle of obligations, responsibilities, and risks that must be handled carefully.

When and why to use a purchase agreement

• Transfer of ownership of both movable and immovable property
  (e.g. cars, equipment, furniture, artwork, real estate)

• Business or enterprise transfers

• Transfer of rights (e.g. intellectual property)

• Even between family members or friends – verbal agreement is not enough

In small transactions, contracts are often verbal or informal – and that’s exactly where disputes tend to arise. The higher the value, the more precise the contract should be.

What to watch out for

• Detailed description of the item – “Škoda Octavia” isn’t enough. Specify VIN, condition, accessories.

• Method and timing of payment

• Transfer of ownership and risk – when does ownership change hands, and who bears the risk?

• Condition of the item and liability for defects

• Penalties for default or contract termination

• Tax implications (real estate transfer, income tax, etc.)

Tips for buyers and sellers

For buyers:

• Make sure the seller is the actual owner.

• For real estate, always check the Land Registry.

• Verify there are no debts, liens, or third-party rights attached.

• Always use a handover protocol – even for vehicles or equipment.

For sellers:

• Clearly define your liability for defects – what’s included and what’s not.

• If the price won’t be paid in full immediately, set clear payment terms or transfer ownership only after full payment.

• If selling “as is”, include proper legal language – it’s not enough to just write it in.

Common mistakes I see in practice

• No date of delivery = unclear transfer of risk

• Vague or undefined purchase price

• Missing proof of funds (especially for real estate – high risk of freezing transactions)

• Only one party has signed the contract (! very common)

• Ignoring VAT or income tax obligations for business sales

When to consult a lawyer

• For real estate, business, or high-value transfers

• If using installments, escrow accounts, or conditional transfers

• When the item involves licenses, obligations, or possible third-party claims

• When you don’t fully understand the clauses being proposed by the other side

Final thoughts – what now?

A purchase agreement isn’t just a formality – it’s a legal shield, if drafted properly. And a trap, if not.

Do you want to be sure your contract will hold up even in a crisis? Get in touch and let’s schedule a meeting. I am specialist on contract law – more information here.