Standard Terms and Conditions of Purchase of Goods
Standard Terms of Purchase of Goods and Battle of the Forms
Where your business purchases goods from other businesses, it is advisable that you, as purchaser, not only adopt your own set of detailed terms and conditions of purchase that favour your business, but also effectively impose them on a seller in a way that makes them legally binding on the seller. If you do not do so, you may be at a legal disadvantage.
Even if you have your own standard terms of purchase they will not be imposed on the seller where, for example:
- terms of sale/purchase are not put forward by either party or referred to in any documents by either of them; or
- the seller puts forward, or refers to, a set of their own sale terms and you, as purchaser do not reject them and apply your own terms.
Sometimes a purchaser and seller each have their own standard terms which they seek to impose on the other party, a situation often referred to as the “battle of the forms”. Further information on this (including guidance about how to ensure that your standard terms of purchase apply to the exclusion of any terms of a seller) can be found here.
New A4 Order Forms with Attached Terms and Conditions
With the aim of assisting purchasers to impose their own terms on sellers, two new templates are available for use by business purchasers of goods. Both templates comprise a pro forma A4 order form to be sent by a purchaser to a seller at the earliest opportunity. Each form has a set of purchase terms printed on its reverse which have been drafted to be more favourable to a purchaser than to a seller.
Since in each case the terms form part of a template order form, they can conveniently be used to place an order on the purchaser’s terms simply by completing the order form and sending it to the supplier.
The primary aim of these two new templates is to:
- provide a simple practical means for you to place an order for goods
- avoid your having to provide terms of purchase separately to the seller
- impose your own standard terms and conditions on the seller as the terms of the purchase transaction.
It must be stressed, however, that just because in any particular case you submit the form to the seller does not in itself ensure that the terms on its reverse apply or that any seller’s terms do not apply instead or as well. That will depend on whether or not, as a matter of contract law, all of the circumstances show that that is the case. Please see the information here about that issue.
Formally Agreeing that Purchaser’s Terms Apply
Rather than entering into a “battle of the forms”, a more constructive and co-operative approach would be to agree clearly with the seller at the commencement of your trading relationship (preferably in an agreement signed by both of you) the terms and conditions that will apply to all transactions between you and the seller. Those terms might be your standard ones or a set of terms specifically negotiated between you and the seller.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.