Information about Purchase Orders
By Steven Kozack.

Question: The customer presents their Purchase Order, with its terms and conditions, etc. We have our Terms and Conditions of Sale on our invoice. When there is a conflict between the two documents [such as difference in price], which is the superior document?

Answer: I would think of this common problem this way... If you do nothing...

• The customer's PO is an offer

• Shipment against that PO without any protest is acceptance of the offer

• Consideration is whatever amount the customer lists on their PO

So we have offer, acceptance and consideration - the three elements of a Contract. What should creditors do? Creditors should inspect POs for unacceptable terms and conditions and/or erroneous prices before entering and processing the order. What should creditors do if they find a 'mistake' on the PO? The company should contact the customer and ask for a written correction to the original PO [or a new PO with the correct price, terms, warranty, etc]. What happens if the customer does not / will not provide a written correction? The order should not be entered or processed or shipped.

With a corrected PO, creditors do not need to be concerned about which terms control the sale. Instead, they have:

• An offer [by the customer on the original PO]

• A counter offer [by the vendor asking for a corrected PO]

• Acceptance [in the form of a corrected PO issued by the customer]

• Consideration

In my experience, problems usually occur during the order entry process. It requires training and discipline to [a] inspect every PO received and [b] when a problem is found not to ship the order until a corrected PO is received. I believe it is a mistake to ship against a verbal commitment by the customer to correct their records or the PO after the fact. Similarly, I would reject a salesperson's commitment that he/she will arrange for the customer to amend the PO after the fact.