Thursday, October 13, 2011
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.
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, Serving You Dayton
Pickrel, Schaeffer & Ebeling Co., LPA, 2700
, Kettering Tower Dayton OH 45423
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