buyout agreement

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Buyout agreement (also known as a buy-sell agreement) refers to a contract that gives rights to at least one party of the contract to buy the share, assets, or rights of another party given a specific event. These agreements can arise in a variety of contexts as stand-alone contracts or parts of larger agreements. Buyout agreements play the biggest role in partnership and corporate ownership contexts where the parties agree that a leaving party will sell their ownership for a specified price to the other parties to the agreement. For example, three doctors could form a joint practice, and the doctors can agree to a buyout agreement where all remaining doctors can buy a doctor’s ownership for $1,000,000 upon retirement.  Buyout agreements can arise in other forms as well such as a landlord paying for a tenant to withdraw from a lease or buying a joint owner’s share of property. 

[Last updated in June of 2021 by the Wex Definitions Team]