Purchaase Orders - are they a valid contract?
HONEYMONSTER
Posts: 45 Forumite
Hi!
Can anyone please give me some advice. My boss wants to see me Friday with regard to a letter I sent and I'm led to believe it maybe the start of a disciplinary.
I work for a charity and we run a showcasing event every year to raise awareness of our services and one of our suppliers completed a booking form which they asked for by email and returned it to us, committing to pay a large sum of money for a stand at our event to show case their product and they also sent their official purchase order. Upon receipt I invoiced them quoting their P/O no and stating payment must be made in full at least 4 weeks before the event as per the booking form they completed and as was acknowledged on their accompanying email. They did not pay. I sent various emails copied in to three different people in the organisation as per their booking form comments and spoke to their accounts dept twice and the problem was that I had an unallocated payment on my books and I needed to ascertain if it was theirs and if not we needed payment by return. I told them that if it wasn't theirs and they didn't pay we may have to try to sell the stand to someone on the waiting list. I could not say we would for definite as it wasn't my decision and I didn't want to sully the waters in case they had made that unallocated payment(which they hadn't). Their accounts person kept saying he would look into it but he never came back. So two weeks before the event, my colleague contacted them and told them they must pay as too late to sell the stand to someone else as the people on our reserve list felt it too short notice. They responded saying it was not an authorised purchase and they would not be attending, nor would they be paying. I pointed out that they had completed and returned our booking form by email from their company address and that it as accompanied by a purchase order and this PO number was quoted on the invoice and at no time during my chasing of the outstanding payment had they raised the unauthorised purchase issue and had they done so at an earlier date we could have sold the stand to someone else but now it was too late. My understanding is that a purchase order is a legally binding statement of intent. I wrote back stating that as their only argument for none payment was that they had not agreed to the purchase and yet they clearly had issued a purchase order to us, that the money remained due. I said I hoped given the fact that we had a PO that we could settle the matter amicably without recourse to further action. They replied accusing me of harassing them for monies not rightfully due and my recommendation to my boss was to legally pursue the monies. I am now being called in for a meeting by my employers as they do not feel my argument is justifiable, that I am incorrect In my belief and I am at a loss to understand this and I was employed to partly chase outstanding debts.
Can anyone please give me some advice. My boss wants to see me Friday with regard to a letter I sent and I'm led to believe it maybe the start of a disciplinary.
I work for a charity and we run a showcasing event every year to raise awareness of our services and one of our suppliers completed a booking form which they asked for by email and returned it to us, committing to pay a large sum of money for a stand at our event to show case their product and they also sent their official purchase order. Upon receipt I invoiced them quoting their P/O no and stating payment must be made in full at least 4 weeks before the event as per the booking form they completed and as was acknowledged on their accompanying email. They did not pay. I sent various emails copied in to three different people in the organisation as per their booking form comments and spoke to their accounts dept twice and the problem was that I had an unallocated payment on my books and I needed to ascertain if it was theirs and if not we needed payment by return. I told them that if it wasn't theirs and they didn't pay we may have to try to sell the stand to someone on the waiting list. I could not say we would for definite as it wasn't my decision and I didn't want to sully the waters in case they had made that unallocated payment(which they hadn't). Their accounts person kept saying he would look into it but he never came back. So two weeks before the event, my colleague contacted them and told them they must pay as too late to sell the stand to someone else as the people on our reserve list felt it too short notice. They responded saying it was not an authorised purchase and they would not be attending, nor would they be paying. I pointed out that they had completed and returned our booking form by email from their company address and that it as accompanied by a purchase order and this PO number was quoted on the invoice and at no time during my chasing of the outstanding payment had they raised the unauthorised purchase issue and had they done so at an earlier date we could have sold the stand to someone else but now it was too late. My understanding is that a purchase order is a legally binding statement of intent. I wrote back stating that as their only argument for none payment was that they had not agreed to the purchase and yet they clearly had issued a purchase order to us, that the money remained due. I said I hoped given the fact that we had a PO that we could settle the matter amicably without recourse to further action. They replied accusing me of harassing them for monies not rightfully due and my recommendation to my boss was to legally pursue the monies. I am now being called in for a meeting by my employers as they do not feel my argument is justifiable, that I am incorrect In my belief and I am at a loss to understand this and I was employed to partly chase outstanding debts.
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Comments
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A purchase order is a commitment so in short yes it is valid. However you have to confirm who's terms they have placed this purchase order on and what these terms are.
If it is their terms then they my have a term noting the right to cancel for convenience, then since you are quoting their terms they would be within their right to cancel.
This is very much a broad brush answer as there is very little detail in your post to give a definitive answer.0 -
Not sure that I would agree - if the terms/ invoice were only provided to the client after the receipt of a P.O. then I am not sure that it could be described as a binding contract. But I suspect this is irrelevant. The entire thing appears to have been a fiasco, on your organisations behalf as well. Telling them that you didn't know whether they had paid or not, and that you had unaccounted payments on the books that you didn't know who they belonged to - you actually have them "permission" not to pay until you lot had sorted out your acts, and in that time, I think I might have developed cold feet about your ability to deliver the event if you couldn't work out where your incoming money comes from! At best this appears to be six of one and half a dozen of the other.
But the allegation appears to be harassment. And if that is the case then the validity or otherwise of the purchase order isn't really the issue - it is the method used to elicit payment. So that is more likely to be their focus - what did you say and how did you say it? And did you have sufficient authority, for example, to imply or threaten that you would take legal action? Because in these circumstances I would think that taking legal action would be cutting off their noses tho spite their face. Charities require goodwill from companies, and the possible loss of income from a stall at an event is small - compared to the loss of future goodwill from that company, it may be a price they weren't ready to pay.
But if what you have done was with your manners full knowledge and support, then that is your defence. If they approved your actions, then they need to say so.0 -
What is your position in the company, because you seem to be an events organiser, rather than accounts?0
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The answer to this is going to be in the detail of whatever contract was formed between the two organisations. Unless there is a specific contract (which it sounds like there isn't), most companies deal with this by having a document that outlines their Terms and Conditions which is sent to any new customer.
Did you send a copy of your Terms and Conditions to the customer?
What do your Terms and Conditions say about cancelling Purchase Orders?
If you didn't send them a copy of your T&C's (or similar document) then your company haven't got a leg to stand on. The fact you received a PO is not going to be sufficient as it can be cancelled unless some document, which has been provided to the customer, states otherwise.0 -
Yes purchase orders can be tricky things.
Often on an order you may see in the smallprint a link to the purchasers terms & conditions.
Certainly have a look closely.
Clearly as per bap98189 above if you have sent an invoice out it hopefully at least has a link to where the buyer can find your full terms and conditions of sale (With a cancelation clause).
Unfortunately even with both it often could just turn into a "who got in 1st" argument.0 -
It is normal for purchase orders to be legally binding.
That is the whole point of sending a PO. A PO is a document formally confirming that the company wishes to buy the product or service. You can't issue a PO and then claim you haven't agreed to the purchase.
In contract law the arguments are usually the other way around. Many companies these days say in their standard T&Cs that they are not contractually obliged to purchase something until they issue a PO.
It sounds to me like you have acted entirely appropriately. I would just explain all that to your boss.
It also sounds to me like the company would be ordered to pay by a court if the charity decides to bring a small claim against them. Your boss will need to make a decision whether he wants to pursue the debt or not.
The points made by other posters about whether T&Cs were attached seem not relevant to me. It is not necessary for there to be a detailed set of T&Cs for there to be a legally binding contract. A buyer issuing a PO which is accepted by a seller is all that is required.
T&Cs would only be relevant if the buyer is alleging that the PO had T&Cs attached which gave the buyer a right to cancel, but it doesn't sound like they are alleging that.
The allegation of harassment is complete nonsense and should be ignored. Chasing up a debt (whether disputed or not) is not harassment.0 -
Of course chasing a debt can be harassment! Don't you ever read the debt boards? It depends on how you chase a debt. Hence my point about exactly what the OP is alleged to have said, or the way that something has been said.steampowered wrote: »It is normal for purchase orders to be legally binding.
That is the whole point of sending a PO. A PO is a document formally confirming that the company wishes to buy the product or service. You can't issue a PO and then claim you haven't agreed to the purchase.
In contract law the arguments are usually the other way around. Many companies these days say in their standard T&Cs that they are not contractually obliged to purchase something until they issue a PO.
It sounds to me like you have acted entirely appropriately. I would just explain all that to your boss.
It also sounds to me like the company would be ordered to pay by a court if the charity decides to bring a small claim against them. Your boss will need to make a decision whether he wants to pursue the debt or not.
The points made by other posters about whether T&Cs were attached seem not relevant to me. It is not necessary for there to be a detailed set of T&Cs for there to be a legally binding contract. A buyer issuing a PO which is accepted by a seller is all that is required.
T&Cs would only be relevant if the buyer is alleging that the PO had T&Cs attached which gave the buyer a right to cancel, but it doesn't sound like they are alleging that.
The allegation of harassment is complete nonsense and should be ignored. Chasing up a debt (whether disputed or not) is not harassment.
And I'm sorry but you are wrong - a purchase order is not a legally binding contract. See here https://en.m.wikipedia.org/wiki/Purchase_order. It is an offer to pay. The contract is agreed when the seller accepts the offer. In this case the seller said not to pay them because they didn't know whether they had already paid or not. That makes this much less clear cut - the seller was in disarray themselves. It is perfectly possible to argue that in refusing payment the seller broke the contract.
And that completely ignores the point that charities depend on relationships with companies. How long will they have those relationships if they take a company to court in this manner? Not just with this company, but with all the others who hear about it - and hear they will.0 -
Of course chasing a debt can be harassment! Don't you ever read the debt boards? It depends on how you chase a debt. Hence my point about exactly what the OP is alleged to have said, or the way that something has been said.
And I'm sorry but you are wrong - a purchase order is not a legally binding contract. See here https://en.m.wikipedia.org/wiki/Purchase_order. It is an offer to pay. The contract is agreed when the seller accepts the offer. In this case the seller said not to pay them because they didn't know whether they had already paid or not. That makes this much less clear cut - the seller was in disarray themselves. It is perfectly possible to argue that in refusing payment the seller broke the contract.
And that completely ignores the point that charities depend on relationships with companies. How long will they have those relationships if they take a company to court in this manner? Not just with this company, but with all the others who hear about it - and hear they will.
You're quoting Wikipedia as a valid reference?
but where at any point did they refuse payment?0 -
Of course chasing a debt can be harassment! Don't you ever read the debt boards? It depends on how you chase a debt. Hence my point about exactly what the OP is alleged to have said, or the way that something has been said.
Chasing a debt will only constitute harassment in very extreme circumstances. The legal threshold for harassment is extremely high.
It is nonsense for this person to suggest that receiving emails asking for payment is harassment. There is no grey area here - this comes nowhere near the legal threshold. If the Op sent a bunch of heavies round with baseball bats, that is the sort of thing that would constitute harassment.And I'm sorry but you are wrong - a purchase order is not a legally binding contract. See here https://en.m.wikipedia.org/wiki/Purchase_order. It is an offer to pay. The contract is agreed when the seller accepts the offer. In this case the seller said not to pay them because they didn't know whether they had already paid or not. That makes this much less clear cut - the seller was in disarray themselves. It is perfectly possible to argue that in refusing payment the seller broke the contract.
Yes, I am aware that English contract law requires an 'offer' (evidencing an intention to be legally bound) and an 'acceptance'.
A PO is about as close as you could possibly get to the perfect evidence of an offer evidencing an intention to be legally bound.
The offer was accepted when an invoice was issued, which the Op did on receipt of the PO.
Forming contracts through a PO/invoice mechanism is absolutely standard practice and the way in which contracts are concluded by most businesses or procurement functions dealing with repeat orders. This is certainly the way in which the procurement function has operated in the businesses I work with.And that completely ignores the point that charities depend on relationships with companies. How long will they have those relationships if they take a company to court in this manner? Not just with this company, but with all the others who hear about it - and hear they will.
Any organisation of any size - whether a charity or a business - is involved in a number of small disputes at any one time. Chasing debt, and the occasional dispute over whether a debt is due, is a perfectly normal part of doing business.
It is not realistic to suggest that people will refuse to deal with the charity in future because it pursues a debt.
Of course the boss of the Op's company may decide it is not worth pursuing the debt either for cost reasons or relationship reasons. That is a decision he will have to make.0 -
I would have thought the booking form was the point at which they entered a contract with you ( not all companies use purchase order numbers anyway )
It does of course depend on what the booking order form says , hopefully it links to your terms and conditions and they have signed saying they have agreed to them, and if they dont then thats hardly your fault its your employers for not getting systems in place to make booking legally binding.
As for the poster saying its your fault because you told them you had received money you couldnt allocate , thats rubbish , they had plenty of time to prove whether it was from them or not , and in fact surely the fact that they said they were checking was proof they wanted to go ahead ! They are trying it on your employers need to escalate their claim for the money
I find sending a letter before action , normally makes them remember they agreed to pay !Vuja De - the feeling you'll be here later0
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