What is a purchase order (PO)?

A purchase order is a contract used to acquire goods and services. Most businesses use purchase orders for small dollar items when no special terms or conditions are required. A PO may also be used to award a task or order specific items under an umbrella contract.

What are the terms and conditions of a PO?

A business will have standard terms and conditions for a PO. These terms are often on the back of the PO. If the PO is used in conjunction with a contract, the terms and conditions of the PO will probably be different from those negotiated in the contract.  You need to be sure to include a letter with the acknowledgment copy of the purchase order stating that the terms and conditions negotiated in the contract supersede those on the purchase order.

Do you need to read and take exception to terms and conditions of a PO?

Yes. You need to read the terms and conditions carefully and take the same exceptions as you would to a negotiated contract. In most instances, you will find that the terms and conditions of the PO are extremely one-sided in favor of the purchaser, in very small print, and contain inappropriate terms for the specific purchase.

Is there an easy way to deal with all those terms?

No. In fact, it is usually more difficult to negotiate changes to PO terms and conditions. The contracts person issuing purchase orders will usually be a junior level person with very little, if any, ability to change the terms. Changes would have to be approved at a higher level. It may be easier to get approval to use our standard agreement.

Does the University issue Purchase Orders?

Yes, and they include standard terms and conditions. 

Will we ever use Purchase Orders under our contracts/subcontracts?

Yes. If we are acquiring supplies or services from an entity that has not been identified and approved in our proposal, that purchase must be done by the University purchasing office. In that case, you must provide all the required flow down terms and conditions to the Purchasing Office so they can include them with the standard terms and conditions of the PO.