Purchase permitted by applicable law: Overview, definition, and example
What is a purchase permitted by applicable law?
A purchase permitted by applicable law refers to a transaction or acquisition that is allowed under the laws and regulations of the relevant jurisdiction. This phrase ensures that the purchase or sale of goods, services, or assets is legally permissible and does not violate any legal restrictions. It is commonly used in contracts and agreements to clarify that the purchase being made is in compliance with all local, national, and international laws that may apply to the transaction.
For example, a company may be allowed to purchase property in a particular country, provided that the purchase complies with that country’s property laws and regulations.
Why is a purchase permitted by applicable law important?
A purchase permitted by applicable law is important because it ensures that the transaction is legally valid and enforceable. It provides both parties with the assurance that they are complying with all relevant legal requirements and that the transaction will not be subject to legal disputes or penalties. This clause is especially critical when dealing with international transactions or industries subject to strict regulations, such as pharmaceuticals, defense, or financial services.
For businesses, ensuring that a purchase is permitted by applicable law helps avoid costly legal issues and ensures that they can carry out their activities without interference from regulatory authorities. For consumers, it guarantees that the goods or services they are purchasing are legal and in compliance with relevant laws.
Understanding purchase permitted by applicable law through an example
Imagine a U.S.-based company looking to purchase equipment from a foreign supplier. The contract includes a clause stating that the purchase must comply with all relevant trade and export laws, including any restrictions on the sale of goods to certain countries. In this case, the purchase would be "permitted by applicable law" if the company ensures that no legal prohibitions are violated, such as sanctions or trade restrictions, before completing the transaction.
In another example, a company in the healthcare industry is acquiring a competitor's assets. The acquisition agreement contains a clause stating that the purchase is permitted by applicable law, meaning the transaction must comply with healthcare regulations, antitrust laws, and any other relevant industry-specific rules to ensure it is lawful.
An example of a purchase permitted by applicable law clause
Here’s how a "purchase permitted by applicable law" clause might appear in a contract:
“The Buyer agrees that any purchase of goods under this Agreement is permitted by applicable law, including all local, national, and international regulations governing the sale, export, and import of such goods. The Buyer shall ensure compliance with all relevant legal requirements before completing the purchase.”
Conclusion
A purchase permitted by applicable law ensures that the transaction complies with all relevant legal rules and regulations. It is crucial for businesses and individuals to ensure that any purchase or acquisition they are involved in is legally permitted, as failure to comply with applicable laws can result in penalties, delays, or invalid transactions. This clause is essential for maintaining legal compliance and avoiding disputes related to the legality of the purchase.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.