Contract Tip: Attaching or Incorporating Quotes into Purchase Orders

The Hidden Risk of Incorporating Vendor Quotes in POs

This contract tip is about referencing or inserting quotes into purchase orders.

Vendors issue quotes to identify the product, price, and other key commercial terms. The customers use these quotes to create purchase orders (PO).

The problem is when the customer adds the quote to the PO. Customers do this by cutting and pasting the entire quote as an attachment to the PO or by saying the quote is incorporated by reference.  

The reason this is a problem is that these quotes usually have their own contractual terms. And these terms usually say that the quote is the vendor’s offer and limits the customer’s acceptance of the terms in the quote. They may also say the terms in the quote prevail over any terms included in the customer’s PO.

When that happens, you have a customer issuing a PO thinking the PO terms control, but that is now in question because the customer incorporated a self-proclaimed prevailing quote into it.

How to Keep Control Over Your Purchase Order Terms

As a customer, the BETTER way to minimize this confusion is to NEVER refer to or incorporate a vendor’s quote into a PO. Instead, type or cut and paste just the essential technical and commercial terms from the quote into the notes section of the PO. 

Make sure the PO has language that requires the vendor to accept the PO as is and with no changes. If the vendor has changes, the customer should cancel that PO and issue a new PO with the same terminology.

This approach creates a clean new offer to the vendor, that the vendor has to accept or reject.

I consider this process to be the best way customers make sure they avoid the battle of the forms and control the terms under which they purchase.

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