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Buying on the telephone - not without risk!

A huge amount of procurement of goods and services is done over the telephone, sometimes but not always with a confirmatory order or letter ... thumbnail 1 summary
A huge amount of procurement of goods and services is done over the telephone, sometimes but not always with a confirmatory order or letter which arrives long after the telephone call and is of doubtful legal significance. Some organisations are very relaxed about this because they feel each individual procurement is of low spend value and consequently the risk of commercial procurement failure is low. However spend and risk are not directly proportional and it is quite possible to take on a lot of risk with a low spend procurement. Other organisations spend enormous amounts over the telephone and actually do not know either how much they spend this way and what degree of risk they are taking.

It is very doubtful whether it is either possible or desirable to stop all procurement over the telephone. In crisis situations, telephone purchasing might be essential and for a lot of other procurement it can be desirable. But it is important to know when it should be done and how to do it. There are six key steps to take before buying over the telephone and each of these has a number of sub-steps. None of them are difficult to apply and they do not slow down the process. What they do is to systematise the way in which procurement over the telephone is done and help to identify and take out risk.
Contract Law - not just for lawyers:
Arising from statute but also very significantly from case law (the decisions made by judges in their courts) contract law is one of those fluid areas of law which often seems to be full of shifting and surprising subtleties understood only by the trained legal mind. Lawyers often have an understandable concern about the non-legally trained layman independently interpreting and applying the law of contract.

A little knowledge is a dangerous thing. However, total ignorance can and often is disastrous. It is the misapplication of a little knowledge which is dangerous and not the knowledge itself. After all, how will you ever know until it is too late that you are getting into trouble if you have no knowledge and consequently cannot recognise early danger signs. Anybody purchasing goods and services on an organisation's behalf should have sufficient knowledge of contract law to know what the pitfalls might be so that they can recognise them and seek appropriate expert advice from the lawyers in a timely manner.

So what are the basics which need to be understood? Well firstly, it is important to know what constitutes a contract, usually thought of as the three basic conditions of offer and acceptance, consideration and an intention to create a legal relationship. It is also important to understand some of the fundamental basics of contract. For example, many people are still under the mistaken belief that a contract must be in writing, or that it can be changed unilaterally by one party without the agreement of another, or that can be terminated whenever you like.

People do not understand that silence is not consent, the difference between express and implied terms, the uncertainty caused by the battle of the forms, the difficulties which sloppy representation can cause, how force majeur can affect things, the main principles of legislation and so on.

Of course, it does take considerable legal training to understand the shifting and surprising subtleties mentioned above but the basic principles are essential knowledge for anybody doing procurement work.