A purchase agreement is a contract that records the terms under which a buyer acquires goods or services from a seller. It may govern one transaction or a series of purchases and normally addresses scope, price, delivery, acceptance, payment, risk, warranties and remedies.
What should the agreement identify?
State the legal parties, specifications, quantities or ordering mechanism, prices and currency, taxes, delivery terms, acceptance, invoicing, payment, change control, liability and governing provisions.
Purchase agreement versus purchase order
The agreement establishes negotiated legal and commercial terms. A purchase order commonly places a specific order under those terms. The documents should state precedence if they conflict.
How are future purchases handled?
A framework or master agreement may allow later orders through releases, statements of work or POs. Each order should identify the agreement and contain the transaction-specific details the master document leaves open.
What requires special attention in overseas buying?
Define the Incoterm and named place, export and import responsibilities, required documents, inspection, title and risk transfer, currency, bank details and dispute mechanism.
What records should be retained?
Keep the signed version, amendments, authorized orders, approvals, supplier notices, delivery and acceptance evidence, invoices and payment records.
