This document is intended for use by a sole trader or small business which from time to time wishes to places orders for the purchase of goods. The document consists of a suggested form of Purchase Order which will have the Buyer's name and address etc at the top of the page.
Depending on the Buyer's requirements, the contents of the Purchase Order may require some adjustment.Annexed to the Purchase Order are standard terms and conditions which can be printed on the back of the Purchase Order.
We would emphasise that these terms and conditions are very short and relatively unsophisticated but they do cover some of the main points which need to be dealt with when placing an Order.
Dealing with the specific terms:
This is intended to give the terms of the Purchase Order precedence over any other terms. In practice this is not always easy since the Supplier, when accepting the Order, may refer to his own terms and conditions as being applicable. This is one reason why we have allowed space at the bottom of the Purchase Order for the Order to be accepted by the Supplier and returned to the Buyer.
2. QUALITY & DESCRIPTION
This requires Goods to comply with the Purchase Order. Any particular requirements of the Buyer should, therefore, be clearly specified in the Purchase Order.
This paragraph also contains requirements with respect to meeting applicable standards, quality and fitness for purpose. The Buyer is given the right to inspect any testing of Goods during the course of manufacture, where appropriate.
This again refers to the Purchase Order so the delivery arrangements should be spelled out there. However, if they are not, this clause requires delivery to the Buyer's address. The clause makes it clear that the Supplier is responsible for secure packaging etc.
This imposes on the Supplier the obligation to replace any defective Goods within 12 months of delivery and the Buyer has the right to reject any Goods which do not meet the Purchase Order requirements.
If no such clause is incorporated, under the general law, the Buyer is likely to have the right to recover damages from the Supplier if Goods are proved to be defective - under English law that right would be continue for 6 years, but it is probably an advantage to have a warranty period during which there is a clear obligation in the Seller to replace defective Goods.
This is likely to be covered in the Purchase Order but if it is not, payment will be due 30 days from the date of delivery.
The right to change the Order is a useful one to reserve and this clause also imposes in the Supplier an obligation to provide a quotation before a change is confirmed.
7. RISK & OWNERSHIP
Risk of loss or damage remains with the Supplier until the Goods are delivered. Ownership of the Goods will normally also pass on delivery. But if any payment is made on account before delivery, ownership is intended to pass at that point.The Supplier is then required to identify the Goods in his premises as belonging to the Buyer: this wording is designed to help if, for example, the Supplier goes bankrupt before the Goods have been delivered, although bankruptcy can complicated from a legal point of view and there is no certainty the Buyer would be protected.
In circumstances where the price includes installation, this clause sets out some obligations on the Supplier. The Purchase Order should refer to installation if that is meant to be covered.
9. LAW & DISPUTES
The governing law of the contract and the courts which will handle the dispute are referred to here.For other clauses and for more detail on governing law and disputes, see our Miscellaneous documents on our website.
The Chinese version contains the following text dealing with governing language, governing law and jurisdiction:
“1. The governing language of this agreement is Chinese/English/other.
2. This agreement shall be governed by and interpreted in accordance with English/Chinese law.
3a. The parties will negotiate in good faith any dispute arising between them and if they cannot resolve the dispute within 15 days, either party may bring legal proceedings in the courts of [ ]; or
3b. The parties will negotiate in good faith any dispute arising between them and if they cannot resolve the dispute within 15 days, either party may commence arbitration in [Beijing, China/London, England] in accordance with the rules of the [China Arbitration Centre/ .....................]. There will be an arbitration tribunal comprising three arbitrators and the award of the arbitrators will be final.”