Purchase Order Terms and Conditions You Should Include
The price and quantity on a purchase order get all the attention, but the terms and conditions decide what happens when something goes wrong. A few well-chosen clauses protect you for years.
1. Delivery Terms
State the required delivery date, the delivery location, and who bears shipping cost and risk. For international purchases, specify Incoterms (for example FOB or EXW) so there is no dispute over freight and insurance.
2. Price and Payment Terms
Confirm the agreed unit prices, currency, and how long the price holds. Specify payment timing (for example Net 30 from invoice) and any early-payment discount.
3. Quality and Warranty
Define acceptance criteria, inspection rights, and warranty duration. Include the right to reject or return non-conforming goods and to have defects remedied at the supplier’s cost.
4. Invoicing and Matching Rules
Require the PO number on every invoice and delivery note. This small rule makes the three-way match painless and kills duplicate billing.
5. Dispute Resolution
Include a clause for resolving disputes – for example negotiation first, then mediation, then a named jurisdiction and law. Written in advance, this avoids expensive surprises.
Put your terms on every order with the free Purchase Order Generator, and structure the rest of the document with our PO format and numbering guide.
Frequently Asked Questions
Are purchase orders legally binding?
Once the supplier accepts the PO, it generally forms a binding contract for the goods or services at the stated prices and terms, in most jurisdictions.
Can a supplier change the terms on my PO?
Only if you agree in writing. If the supplier ships on different terms than the PO states, resolve the discrepancy before accepting, and confirm any change with a PO amendment.
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