1:33 PM
Despite good intentions and the widespread availability of terms and conditions for purchasing organisations, an enormous amount of goods and services are bought on the terms and conditions of the vendor. The reason for this is the cost and time taken to impose a purchaser's terms and conditions, the inexperience of staff undertaking purchasing work especially low value purchasing and the relative lack of power/influence which the purchaser might have in many circumstances.
In practice, it is often not worth while trying to impose a purchaser's terms and conditions, however this should not mean that there should be no awareness of the risk of using another party's terms and conditions. The objective of all terms and conditions is to minimise risk and this is often done by passing the risk onto the other party. Sellers usually like to pass as much risk as possible on to the buyer.
If frequently purchasing on a given supplier's terms and conditions, it makes sense for the purchaser to know what are the risks of using these terms and conditions. Steps should be taken to reduce the impact of harsh terms and conditions and, if this is not possible, consideration should be given to not using this supplier in the future. Even when dealing only occasionally with a supplier or, indeed only on a one-off basis, it is as well to know what risks are being passed to the purchaser.
There are three key steps to dealing with the risks of buying using a supplier's terms and conditions:
The first step is, of course, to know what risks to look for. Many personnel engaged in purchasing, particularly those who do this sort of work as only a part of their responsibilities find this difficult. There are nine key areas which should be checked: delivery, passing of title, insurance, terms of payment, loss or damage, acceptance/failure, rejection, fitness for purpose, quality.
The next step is to have a clear idea of what is acceptable and what is not.
The final step is to take action to deal with unacceptable risks