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Purchase Order

Purchase orders are commercial documents that a buyer gives a vender that includes the type, amount, and price for the items or services that are to be delivered to the buyer from the seller. Buyers provide the venders with a purchase order with the intent of purchasing a product or service. There are no contractual obligations until the vender accepts the purchase order. Once the purchase order is accepted, the vender has entered into a written contract with the buyer. Below are just a few of the more commonly asked questions regarding purchase orders that have been answered by Experts.

If a purchase order is written to a distributor and sent to the manufacturer, does the manufacturer have the right to fulfill the order directly without compensating the distributor?

Generally, this will all depend on whether the distributor has a contract with the manufacturer and how the contract reads. If the contract specifies that the distributor covers all business orders if the product is being supplied in the distributors region there may be an issue. However, if the contract doesn't state this, the manufacturer is within its rights to fulfill the order to the retailer. Basically, if the manufacturer doesn't intentionally go after the distributor's customers to fill orders, there wouldn't be an issue of intentional interference. You should carefully read your contract to determine if the manufacturer is in the wrong.

If an electrical contractor issues a purchase order with no completion date can they demand an end date in mid stream of a job in progress?

Usually, if there is no completion date specified in a contract, there is the expectation that the job will be completed in a timely manner. The answer to what is a reasonable amount of time would have to be answered by a judge. While it is fine for a contractor to ask that a job be finished at a certain time after the contract has been drawn up, the contractor cannot demand the date to be the completion date. The person providing the work for the contractor would usually respond to the contractor's demand with an estimated time of when the service provider thinks the job can be finished. However, the estimated date given by the service provider isn't an offer to modify the contract; it is simply an estimated date of when the job should be done. If the contractor terminates the contract as a result of the service provider not adhering to the imposed completion date, the service provider would accept this action as a breach of contract and file suit against the contractor.

In the event a duplicate order is sent to a vender, who is responsible for the duplicate shipment; the vender or the buyer?

Generally, when a situation like this occurs, the vender would be responsible for any duplicated purchase orders that were sent to a buyer. However, if the vender has a disclaimer that states the buyer will be responsible for the return of a duplicate purchase order, the buyer would be responsible for the return of the order. If the buyer has a contract with the vender that states responsibility falls on the vender for the return of a duplicated purchase order, the vender should comply with the contract. If the vender won't pay for the return shipment, you may want to look into POD (payment on delivery). By shipping the purchase order by POD, the vender will be expected to pay for the shipment when it reaches his/her business. If the vender tries to refuse the order but wants to double charge you for his/her mistake, you need to argue the attempt.

Is it legal for an importer to cancel a purchase order if the order has been manufactured but hasn't been delivered yet?

It is legal to cancel a purchase order at any point before the order has been delivered, and in some situations, the order can be canceled upon delivery. You might face some expenses or be held liable to pay outbound charges if a purchase order had already been loaded on a ship when it was canceled. You should review your purchase order terms or your contract if you have one. The manufacturer can charge the buyer with a penalty for canceling a purchase order. The charge is generally determined by what step of manufacturing the product was in when the cancelation was made.

Can a simple purchase order be created for the delivery of services or should there be a contract for services?

With both of these options, a person can add a termination provision. By adding this type of provision, you will be protecting your interests. However, both parties must agree to the provision. A purchaser of services usually doesn't like to be committed to a long term agreement. Generally, a 30 day notice is the extent of a service agreement.

Purchase orders are a contractual agreement between a buyer and seller for specific goods or services. Many people aren't familiar with how purchase orders work and tend to have questions. If you find yourself wondering about purchase orders and how they work, you should ask an Expert to explain how they work.
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