Purchase Order template

Overview

A purchase order (PO) is the document a buyer sends to a supplier to formally request goods or services on stated terms — quantity, price, delivery date and any specific conditions. Under English contract law, a purchase order is generally treated as an offer to buy on the terms stated, which the supplier accepts (expressly, or by starting to perform, e.g. by dispatching the goods). Where both buyer and supplier have their own standard terms, a mismatch between the buyer's PO terms and the supplier's acknowledgement or invoice terms can trigger the so-called 'battle of the forms' — under the traditional English 'last shot' approach, the terms of the last set of terms sent before performance begins, without objection, generally prevail, though the court will still look at the parties' overall conduct. For a business buyer, once accepted, the resulting contract for the sale of goods is governed by the Sale of Goods Act 1979, implying terms as to satisfactory quality, fitness for purpose and correspondence with description; these can be excluded or limited between businesses subject to the reasonableness test under the Unfair Contract Terms Act 1977. Where services are also ordered, the Supply of Goods and Services Act 1982 applies the equivalent implied term of reasonable care and skill. When to use it: for any one-off or recurring purchase of goods or services from a supplier, particularly where the buyer wants its own terms to govern the transaction rather than accepting the supplier's standard terms by default. Parties: the buyer (who issues the order) and the supplier (who fulfils it). Key clauses: a unique PO reference number; description, quantity and specification of the goods or services ordered; price and payment terms; delivery date, location and method; a statement that the buyer's terms and conditions apply (referencing or attaching them) and prevail over any conflicting supplier terms; and an acceptance mechanism (e.g. deemed acceptance on dispatch of goods or commencement of services). Pitfalls to avoid: sending a PO with no reference to which party's standard terms apply, leaving the contract exposed to whichever set of terms was sent last before performance began ('battle of the forms'); omitting a firm delivery date, which weakens the buyer's ability to reject late delivery; and treating the PO as a formality rather than the actual contract-forming document — it is usually the offer that, once accepted, fixes the binding terms.

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