Terms and conditions of purchase

In the supply of goods or services, the arrangement might involve simply a set of standard terms and conditions (particularly in the case of a routine transaction).

However, where a closer buyer/seller relationship is envisaged, there may well be a supply contract covering ongoing aspects of the relationship complemented by standard terms and conditions governing individual consignments.

Terms and Conditions of Purchase

This document from the point of view of the buyer, should include the following:

• the goods or services which are to be the subject of the sale;
• the price, method and time of payment (and whether time is of the essence);
• the place, method and time of delivery or performance (and whether time is of the essence);
• when you are considered to have accepted the goods or services as satisfactory (as a buyer of goods you are allowed by law a reasonable opportunity to examine them before accepting them);
• when the risk of loss or damage to goods passes to you;
• when ownership of goods passes from seller to buyer – watch out in particular for a retention of title clause;
• the warranties that the seller gives as to the quality and suitability of the goods or services (see below);
• the liabilities and redress of either party in the event of defect in the goods, failure to perform or other eventualities (see below).

Seller’s Warranties and Liability

A key issue in the Terms and Conditions of Purchase is to ensure that the seller offers appropriate warranties and accepts liability if something goes wrong.

You would normally expect to receive express warranties from the seller as to goods or services to be supplied.

In addition, with agreements for sale of goods by businesses, there are terms legally implied as to satisfactory quality, fitness for purpose and conformity with the sample or description.

These terms can be excluded or limited by the seller in the agreement unless it is unreasonable for him to do so.

What is unreasonable will vary in each case but unequal bargaining positions may allow you to argue that the exclusion/limitation is unreasonable and hence unenforceable.

With agreements for the supply of services by businesses, there are terms legally implied as to the use by the service provider of reasonable care and skill, that a reasonable time to do the work is taken and that charges are reasonable.

You would normally also wish the seller to accept legal responsibility (liability) for loss or damage arising from his breach of contract, negligence or otherwise.

In addition, you may seek an indemnity under such circumstances to cover any resulting loss you may suffer.

The seller cannot exclude or limit his liability for damage for personal injury or death caused by his negligence under any circumstances.

However, a seller can, and will, normally exclude liability for consequential damage.