“Purchase Price” Has Two Meanings

I’ve long observed that the defined term Purchase Price is used two convey two meanings:

First, the price at which something is to be sold, as in this example:

Subject to the terms and conditions hereof, the Company hereby agrees to issue and sell an aggregate of one hundred nineteen thousand nine hundred forty (119,940) shares of the Preferred Stock (the “Purchaser Shares”) to Purchaser for an aggregate purchase price of $40,000,000.00 (the “Purchase Price”).

And second, payment of an amount of money equal to the price at which the thing in question is to be sold, as in this example:

The Buyers acknowledge and agree that the Sellers’ receipt of the Purchase Price and the other sums payable to them under this Agreement shall be a condition precedent to the Sellers’ obligation to procure the discharge and deletion of the Mortgage and the issuance of the Certificate or Transcript of Registry referred to in the preceding sentence.

A given reference to Purchase Price could express both meanings, as in this example:

Purchaser shall pay to the Company the Purchase Price by wire transfer of immediately available U.S. funds.

To distinguish these meanings would require using one or both of two different defined terms, Purchase-Price Amount and Purchase-Price Payment. Or you would define Purchase Price to mean the amount and refer to the payment by saying an amount equal to the Purchase Price. I’m favorably inclined to distinguishing somehow between the price and the amount, simply because it’s clearer. Any thoughts?

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.