Legal Definitions - bought note

A bought note is a formal written document, typically issued by a broker or agent to their client, confirming the details of a purchase transaction that the broker executed on the client's behalf. It serves as an official record of the agreement, outlining key information such as the specific item or asset acquired, the quantity, the purchase price, the date of the transaction, and any associated commissions or fees. This document provides the client with proof of the transaction and a clear summary of the terms.

• Example 1 (Stock Market Transaction):

  Imagine a client instructs their financial advisor, who is also a licensed stockbroker, to purchase 100 shares of "Green Energy Solutions Inc." stock. After the broker successfully executes the trade on the stock exchange, they would issue a bought note to the client. This note would specify that 100 shares of Green Energy Solutions Inc. were bought, the exact price per share, the total cost, the date and time of the transaction, and the broker's commission. This document confirms the client's ownership of the shares and the precise terms of the purchase.

• Example 2 (Commodities Market Transaction):

  Consider a bakery chain that wants to secure a future supply of sugar. They engage a commodities broker to purchase a futures contract for 10,000 pounds of sugar for delivery in three months. Once the broker completes this transaction on the commodities exchange, they would send a bought note to the bakery chain. This note would detail the specific sugar futures contract purchased, the quantity (10,000 pounds), the agreed-upon price per pound, the delivery month, and any brokerage fees. The bought note acts as the official record of this forward-looking purchase, confirming the terms to the client.

• Example 3 (Art Acquisition):

  Suppose an art collector hires an art dealer to acquire a specific sculpture by a contemporary artist at a private sale. If the dealer successfully negotiates and purchases the sculpture on behalf of the collector, the dealer would then provide the collector with a bought note. This note would confirm the purchase of the specific sculpture, the final acquisition price, any dealer's commission, and the date of the transaction. This document formalizes the acquisition and serves as the collector's proof of purchase through the dealer, detailing all relevant financial aspects.