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What Are Standard Purchase Order Terms?

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  • Written By: Daphne Mallory
  • Edited By: C. Wilborn
  • Last Modified Date: 07 July 2014
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There is often little variation between purchase order terms in many different industries. The terms are usually the same, but they are often customized to the industry and between parties. The key terms often begin with price, payment terms, and delivery. Next, goods and services, packaging, and inspection are addressed. Finally, excusable delays, risk of loss, and warranties are some of the standard purchase order terms found in the remaining clauses of the agreement. The buyer and seller sign a purchase order, which codifies the terms and forms the basis of a contract.

Purchase order terms and conditions often state the price and payment terms in the beginning of the document. Some terms dealing with pricing will state the currency of payment the seller can expect. It may also direct the seller to submit an invoice in order to receive payment, often within 30 days of delivery. The delivery terms should include the place of delivery and date or number of days the goods and services should be delivered after the seller signs the purchase order.

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To avoid confusion and to clearly define expectations, goods and services are often one of the standard purchase order terms. This is a basic description of the tangible items or work that the seller agrees to deliver. Packaging terms are often included to guarantee that the goods won't be damaged in transit. Inspection is the means by which the buyer can ensure that the goods were not damaged, and the buyer can usually accept or deny the delivery goods within a reasonable time frame.

A major issue as it relates to purchase order terms and conditions pertains to risk of loss. The seller or buyer has to be financially responsible for damages or defects of the goods and services until delivery, and it is often the seller who bears the risk of loss. Some circumstances are out of the control of both parties, such as a natural disaster, which often delays the delivery of goods or services. Under the excusable delays term, the buyer has a right to terminate the agreement or extend the delivery date. The seller often has to sign warranties as part of the purchase order terms, which state ownership of the goods and services delivered, and that they are free of defects and suitable for use.

The termination provisions of a purchase order will usually favor the buyer. For example, a purchase order term can grant the buyer the right to cancel the order before shipment or delivery. It is important to review all the terms of a purchase order carefully, because they may favor only one of the parties until more equitable terms are negotiated.

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