Terms and Condition for Purchase Order
A purchase order constitutes a legal contract between your company and the vendors or suppliers that you rely on for goods and services. A term and condition can protect your interests.
The rights and responsibilities of the buyer and supplier are described in the terms and conditions of a PO. When the terms and conditions are present, the purchase order protects both the supplier and the buyer against any mishaps, depending on the specific terms and conditions established in the offer and the purchase order.
At the start of a business relationship with a new supplier, the parties often agree on the terms and conditions that apply to all simple transactions, so it is unnecessary to establish new terms and conditions for each transaction. Therefore, the purchase order may or may not always contain contractual terms and conditions. However, where no prior agreement between the supplier and buyer exists, considering including basic terms and conditions in the purchase order.
If one party proposes a change to the contractual terms, it is better to negotiate in a proposal document and not in the purchase order. This will avoid having two documents with differing terms and conditions.
Purchase order terms and conditions typically include these fundamentals:
- General – general description of the terms and conditions and subject matter
- Buyer rights, obligations and incentives
- Supplier rights, obligations and incentives
- Payment terms – show in detail and any incentives or penalties
- Confidentiality
- Insurance
- Dispute resolution
- Termination
- Definitions