The purchase agreement or buy-sell agreement is also known as the "asset purchase agreement" (APA), the "contract of sale," the "purchase offer & acceptance agreement," and various other terms. This is the document presented by the buyer to the seller as an offer that the seller then accepts, rejects, or answers with a counter-offer. When both parties have signed, the contract is created, and the due diligence and escrow processes begin. Typically, the APA is drafted by the seller's or buyer's broker on a standardized form that covers all the essential elements of the deal being offered - subject matter, identification of the business and its assets, the purpose/objective of the contract, the identities of the parties, price, terms, and (usually) several contingencies, as well as other important and customary provisions.
Among the contingencies is almost always a due diligence period and all the contingencies that "due diligence" entails, and, often, also contingencies concerning the posting of a good faith deposit, the transfer of the lease, the obtaining of financing, and, sometimes, the transfer of a franchise. When it is presented by the purchaser, the seller then can accept it as is, can reject it completely, or can make a counter-offer, changing specific terms and conditions.
When there finally is an offer and a matching acceptance, there is a "meeting of the minds" - another essential element verified by the signatures of both parties, and a contract then comes into existence. Essentially, once the APA is signed by both parties, the seller typically has an absolute obligation to sell, but the buyer has only a contingent obligation to buy - all the contingencies or conditions must be met before the buyer's obligation becomes "absolute." The APA becomes the "blueprint" by which the entire transaction is directed, and which the parties, their representatives, and the escrow agent must honor.
The APA is a legally-binding document that could be the most important document signed in the history of the business - for the buyer and the seller. The parties should take this step very seriously and with professional representation - whether that is from a licensed business broker, or an attorney, or both.