Thursday, October 6, 2011
Why Do I want to have my own Purchase Order Form?
If a business is buying goods from a vendor, the business will issue the vendor a purchase order. This purchase order will include the basic terms of the deal including: the date the order was submitted, a description of the goods being ordered, the quantity of goods being ordered, the price to be paid for the goods, the terms of payment, and the date the goods are required to be delivered. But the purchase order should and often does include many other terms and conditions including: an indication of the mode of transportation and who is paying the freight charges, whether there are separate packaging charges, when title and risk of loss to the goods passes from the vendor to the buyer, whether warranties are being given and for how long, whether the transaction is subject to sales or other taxes, which laws govern and where venue and jurisdiction lie.
The purchase order submitted by the buyer can be on buyer's form, or it can be submitted by the buyer on a form provided by the vendor. The terms and conditions of sale can be vastly different depending on whose form is used. The buyer’s form will set governing law, venue and jurisdiction where buyer’s business is located. The vendor’s form will set governing law, venue and jurisdiction where the vendor is located. Having governing law, venue and jurisdiction where your business is located gives you a bug advantage in any dispute where the other party is located out of town or out of state.
The buyer’s form will require the vendor to extend warranties of merchantability and fitness for particular use and other warranties for a significant period of time. The vendor’s form will disclaim all warranties or restrict the applicability of such warranties severely. The buyer’s form will often shift packaging, freight, insurance and other charges to the vendor, while the vendor’s form will shift these charges to the buyer. Using your own purchase order form can give you a significant advantage.
If you purchase a significant amount of goods or services for your business, you should develop and use your own purchase order form. In this way you know the terms and conditions of each deal will be the same (you won’t be subject to different terms every time you buy goods), and you can perhaps shape the terms of the deal to your advantage. Let me know if you need any help with preparing appropriate terms and conditions for your company’s Purchase Order.
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