Purchase order against sales contract
Most trade runs on purchase orders and never has a signed contract. That works until something goes wrong. Then the only question is whose terms apply, and the answer usually depends on which document was sent last.
For repeat business at modest values, a purchase order with your terms is normally enough. For a first order with a new partner, a high value, custom manufacturing, or anything with staged payments, put a sales contract in place. A purchase order and a sales confirmation with different terms will cause a dispute sooner or later.
| Purchase Order | Sales Contract | |
|---|---|---|
| Written by | The buyer. | Both, and signed by both. |
| Whose terms | The buyer's, if accepted as sent. | Negotiated. |
| Becomes binding | On the seller's acceptance. | On signature. |
| Covers | This order. | The relationship, often several orders. |
| Usually silent on | Governing law, disputes, force majeure. | Nothing important. |
The battle of the forms
The buyer sends a purchase order with their terms. The seller replies with a sales confirmation with their own terms. Each side assumes their terms apply. Which set governs depends on the country and on the order the documents were sent in. In practice, nobody knows until a court decides. You do not want to find that out after a shipment has been rejected.
What a purchase order should always state
The Incoterm with its named place, the payment terms, the delivery date, and what the goods actually are. Give a specification, not just a part number. Those four things decide most of what can go wrong. If you send a bare order with only a price and a quantity, the supplier's terms apply to everything else.
The buyer's formal instruction to supply goods on stated terms, prices and delivery dates.
The agreement itself: goods, price, delivery terms, payment and the clauses both parties sign against.
+Is a purchase order legally binding?
It becomes binding when the seller accepts it. They can do that by confirming in writing or simply by shipping the goods. Before acceptance, it is an offer the buyer can withdraw.
+Do I need a contract for every order?
No. The usual arrangement is one framework sales contract, signed once, with individual purchase orders under it. That avoids negotiating terms again for every shipment.
Try it with a real shipment.
The generator on this page is the real product. Fill it in, download the PDF, and see if it is what you need.
Browse all 33 documents