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A customer submits a P.O. with incorrect terms. Specifically, they reserve the right to terminate the order at any time at their convenience. We do not want to manufacture something that we would not normally build in the amount [quantity] requested knowing the customer could cancel the order at any time. Why would they include this clause, and what should we do about it?

Answer: The customer may be hedging its bets. If prices stay the same or go up, they will buy from you. If they go down, or if they find a better deal elsewhere any time before the order ships they will cancel the order. If the problem involved an incorrect price or the wrong terms, it might be enough to request a letter or fax from the customer acknowledging "your" price or "your" terms as being correct. However, since this involves the buyer's right to cancel the order, I would insist that the P.O. be voided and a new written purchase order be issued with acceptable terms and condition. In this case, I would be looking for a P.O. that did not give the buyer the right to either delay shipment [possibly indefinitely], or void the order at their convenience.

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