Don’t be too keen to get a purchase order
It can be tempting to ask your customer to accept your proposal by sending over a purchase order as quickly as possible, to ’seal the deal’. This might not necessarily be the best thing for the business, even if your order book has been a bit empty recently.
Under English law, the last set of terms exchanged are deemed to be the ones by which the subsequent business is conducted. If that last set of terms happens to be your customer’s PO, then you might run in to trouble if you’re not diligent in checking what they say before you deliver!
Hidden in the small print?
If the PO arrives some time after you sent your proposal, the pricing may no longer work for you, due to changes in your costs over the intervening period (especially true in these newly inflationary times). The customer’s PO might specify payment terms far longer than you would like. They might hide their right to reject services or goods in the small print, or extend this right way beyond the normal timeframe. They might have excessive options for them to claim compensation from you, if something goes wrong with your products or services – and they’re highly unlikely to have any limits or exclusions on your liability for loss or damage if you make an error, or your product doesn’t work as planned.
You get the idea. Ideally, you should be asking your client to re-submit their PO with reference to your terms of business, and your proposal. If you’ve been short on orders, it can be tempting to jump right in to supplying the customer with goods or services without actually clarifying which terms will apply.
Cancelling things at the last minute
At Devant we’ve seen businesses set up complex manufacturing operations only to have the customer cancel at the last minute – perfectly in line with their preferred terms as they were the last party to send a contract over.
Beware also that overseas customers can have rights in accordance with their local laws which could well apply, depending on how the contracts are structured and how they have been exchanged.
Your Devant team is happy to advise on all aspects of contract law, and to help you set up your systems so you’re geared for success – and, importantly, that you don’t fall in to any of the pitfalls that can result from accepting a PO without appreciating the terms that go along with it!
Please get in touch and we would be delighted to help.
