The purchase order and contract

What is not written does not bind. The purchase order and contract are what both sides return to in a dispute, so write them clearly and in language the supplier understands.

What a purchase order contains

• The official names and addresses of both parties.
• A description of the product with the tech pack and the approved sample.
• The quantity by size and colour.
• The price and delivery terms.
• Production and delivery dates.
• Payment terms.
• Quality standards, acceptable defects and what happens when they are exceeded.
• Packing and labels.

Clauses that protect you

• The right to inspect before shipping.
• What happens on delay: a discount or air freight at their cost.
• Confidentiality of the designs and not using them for anyone else.
• The governing law and how disputes are resolved.

Consult a professional

These lessons do not replace a legal adviser. For large orders, have a lawyer who knows international trade look at the contract; the cost is far less than losing an order.

Exercise

Prepare a purchase order for your product with the eight items, and write the quality and defects clause in numbers. Then reread it assuming a dispute has happened: does the text settle it?