How Do I Win the Battle of the Forms?

When a business is buying goods from a vendor, the buyer will issue the vendor a purchase order.  A smart buyer will generally submit the order using a purchase order form developed by the buyer.  This purchase order form will include terms and conditions favorable to the buyer. 

The vendor on receipt of the purchase order will generally respond by sending the buyer a sales acknowledgement.  This sales acknowledgement will contain terms and conditions favorable to the vendor.  Many times the terms and conditions set forth on the buyer’s purchase order will be in direct conflict with the terms and conditions set forth on the vendor’s sales acknowledgement form.  Whose terms control?  It depends.

When trying to determine whose terms control, a court may look to which terms are more reasonable, which terms reflect normal business practices or which terms have been followed by the parties in the past.  The court may also look to self-serving language in the terms and conditions themselves.  For example, the purchase order may contain language that says the purchase order is subject to all the terms and conditions set forth therein, and is only valid if the vendor accepts all such terms and conditions.

Often a larger or stronger business is in a position to tell a smaller or weaker business to “take it or leave it.”  That is, submit purchase orders on our form or we won’t accept your order.  But in any case where you have an opportunity to submit a purchase order or send a sales acknowledgment on your own form, you are wise to do so.  At the very least, you create an argument that you have not agreed to every unfavorable term contained in the other party’s form.

Give me a call if you have a dispute with a customer or vendor, or need help drafting terms and conditions for your purchase order or sales acknowledgement form.

Thanks for sending a copy of SenneySays to your to your friends.    

AND ONE MORE THING.   Ever heard of a preference payment?  When a client pays you and then goes bankrupt within 90 days, the bankruptcy trustee will often treat the payment as a preference and may sue you to recover the payment.  There are some defenses that may apply.  If you are being asked to pay back a preference, give us a call and we can discuss your defenses.  Jsenney@pselaw.com or 937-223-1130.

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Pickrel, Schaeffer & Ebeling Co., LPA, 2700 Kettering Tower, Dayton OH 45423

www.pselaw.com

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