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The Purchase and Sale Agreement -- the Buyer's View

Milam Randolph Pharo, Oil and Gas Agreements: Sales and Financings (2006)

The goal of the Buyer in preparing the purchase and sale agreement and attendant transaction documents is to preserve the value perceived by the Buyer at the time of making its proposal. This being said, there are risks that must necessarily be born by the Buyer. Notwithstanding that there are risks that a Buyer should be willing to take, it rarely should move to the extreme desired by most Sellers who have come to believe that they should be paid the offer price whether or not they possess the totality of the interests they represented to sell, and further, without regard to the often unquantifiable liabilities to which the properties may be subject. Thus, the Buyer must strive to achieve a contract that properly allocates the risks attendant to purchasing the properties to ensure that the Buyer does not pay full value for something less than the Buyer sought to acquire.

A seldom discussed component of Buyer achieving the goal of perceived value preservation is that the Buyer must know and preserve the perceptions of value held by the Buyer's internal technical staff. While this may or may not be directly written into the contract, as it may or may not affect the items of value perceived by the Seller for which the Seller seeks compensation, these items are nevertheless crucial to the Buyer obtaining the value it seeks to obtain by engaging in the transaction. These u