Purchase Order Lawyers

A contract is an agreement that creates obligations that are enforceable in a court of law and is generally used to exchange products or services. Depending on the terms and the context of each specific contract, a contract can be either simple or complex.

When there is a dispute between parties over an alleged contract, the court must first establish that a contract even exists. Four essential elements make up a valid contract, and the complaining party must prove that these elements are present:

1. Offer: One or both of the parties made a promise to do or refrain from doing some specified action in the future;
2. Consideration: Consideration is a word which represents that something of value was exchanged for something else of value. An example of this would be money exchanged for services. Consideration refers to the value that entices the party to enter into the contract;
3. Acceptance: Unambiguous acceptance of the terms of the contract must be shown through words, deeds, or performance. If the contract specifies the exact manner of acceptance, then acceptance must generally mirror the terms of the offer; and
4. Intent: The parties involved must have had the intent to contract. What this means is that the parties must intend to create legal relations and must understand at the time of contracting that the agreement is enforceable in a court of law.

Two different laws govern how the court will interpret the contract and how the court will enforce it. The Uniform Commercial Code, or “UCC,” controls contracts that are primarily for the sale of goods. The UCC provides that acceptance does not have to mirror the terms of the offer for a contract to be found valid, unless:

• The terms of acceptance significantly alter material terms of the original contract; or
• The offeror objects within a reasonable amount of time.

Most states have adopted the UCC in whole or in part.

Common law governs the majority of contracts. Each state’s common law is an evolving set of laws, which are mostly judge-made, that result from court decisions through the years.

Are There Different Types Of Contracts?

There are a variety of different types of contracts, including:

• Bilateral Contracts: A bilateral contract involves a mutual exchange of promises and is commonly regarded as the most common of contracts. An example of a bilateral contract would be performing the act of mowing a person’s lawn in exchange for money for performing the act;
• Unilateral Contracts: A unilateral contract is one in which the offer requests performance instead of an exchange of promises. A unilateral contract is generally only complete and formed when performance is complete. An example of a unilateral contract would be a “reward” poster. The contract is only formed when the item requested on the reward poster is returned, and once returned, the money will be provided for performance;
• Express Contracts: An express contract is a contract that is formed by explicit language. An express contract recites the agreement and its terms in entirety and specificity; and
• Implied Contract: An implied contract is a contract based on the conduct of the involved parties. Where there may not be a clear contract, one will be found where the parties’ behavior shows a clear intent. An example of an implied contract would be when a veterinarian examines and treats an animal in their office. It is implied that the veterinarian will do their best to treat the animal, and that the client will pay the fee charged for the treatment.

What Is A Purchase Order?

A purchase order is a document that a buyer of goods provides to a seller of goods. This document outlines the terms of the sale, as well as the terms and conditions of the business relationship between the parties. Purchase orders are generally a form of contract. Documents such as solicitations for bids and construction specifications are treated similarly to purchase orders.

It is important to note that purchase orders may conflict with sales invoices, which are similar contracts that are provided by the seller of goods to the buyer. In terms of what should be included in a purchase order, the following are some common examples:

• Quantity and price of all specified goods;
• Method of acceptance;
• Shipping instructions;
• Cancellation and inspection procedures;
• Rights of the buyer to reject the goods;
• Requirement of the seller to substitute or replace goods;
• Warranties; and
• Assignability of the contract.

What Is A Breach Of Contract?

Breach of contract is a cause of action that is brought in a court of law. A breach of contract occurs when one or more of the parties to a contract does not honor an agreement between the parties to a contract. A breach can occur through:

• Non-performance;
• Interference with the other party’s performance; or
• Failure to perform according to the terms of the contract.

A minor breach occurs when there has been substantial performance of the contract. The non-breaching party cannot sue for specific performance, but may sue for actual damages. An example of a minor breach would be when a contractor is hired to install a certain brand of plumbing pipe but installs another brand of plumbing pipe that is of equal value. The court will not require the contractor to remove the existing pipe, even if it is incorrect; this is because the value is equal, and this would amount to economic waste. Economic waste refers to tearing down or destroying something of value. However, the homeowner may be able to recover actual damages.

A material breach occurs where a party fails to perform, and the non-breaching party can then either sue for specific performance or for damages resulting from the breach. An example of this would be how if the contractor in the example above had installed plastic pipes instead of iron pipes, the homeowner could sue in order to recover the cost of correcting the breach. This would amount to the cost of removing the plastic pipes, as well as installation of the iron pipes.

According to the UCC, a contract for the sale of goods may be breached if a seller provides the buyer with the wrong items. Specifically, under Article 2 of the UCC, there are a number of ways in which merchants may deal with a possible breach of contract situation. Three of these include:

• Nonconforming Goods: If non-conforming goods are sent with a note of accommodation, the shipment is considered to be a counteroffer. If accepted, a new contract is formed between the two parties. Alternatively, if the seller refuses to conform to the contract and the buyer does not accept the non-conforming goods, the buyer can sell the goods and sue the seller for the difference from the contract price;
• Perfect Tender: Under the UCC, a buyer has the right of perfect tender. This requires that the seller provide the goods according to the contract terms. If the goods are not perfect tender, the buyer may either accept all, reject all, or accept the conforming goods and reject the non-conforming goods. This must be within a reasonable time, but before acceptance. Additionally, the buyer must notify the seller of the rejection; and
• Anticipatory Repudiation: Under both common law and the UCC, anticipatory repudiation occurs when there is a clear and unequivocal indication that one party will not perform under the terms of the contract. The non-breaching party can either treat the contract as breached, terminate the contract and sue for any damages, or continue their performance under the terms of the contract.

Do I Need A Lawyer For Help With Purchase Order Issues?

If you are drafting a purchase order or sales contract, you should consult with a contract attorney who will help guide you through the complicated legal process. An experienced contract attorney can help you understand your legal rights and options and will also be able to represent you in court, as needed, should any legal issues arise that require representation.