Your document ordering a quantity of goods at a price, on a delivery date.
A PO is your offer. It binds the supplier once accepted, in writing or by starting production. The trouble starts when the PO and the supplier’s PI say different things about price, specification or delivery, and nothing says which one governs.
If you order repeatedly from the same factory, put the standing terms (quality, inspection, molds, confidentiality, breach) in a framework agreement once, and let each PO carry only quantity, price and dates under it. The framework should say that it governs where a PO or PI conflicts with it.
Two documents, two contracts
A common situation: the buyer’s PO says “quality per attached specification, inspection before shipment”, the factory answers with a PI that says “quality per sample, no claims after shipment”, and production starts. Each side now holds a document it calls the contract. A court will ask which terms were changed and whether the change was material, and it will look at what each side did next (Civil Code arts. 480 and 488).
Acceptance does not have to be a signature. Where trade practice or the offer allows it, acceptance can be made by conduct, and starting production on a PO is the usual example. A buyer who sends a PO and stays silent while the factory sends back different terms is not in a safe position.
The sentence to print on every PO
Put this at the foot of every PO, in English and Chinese:
“This order is placed under the Framework Purchase Agreement dated [date]. Any term in the Supplier’s PI, quotation or confirmation that differs from this order or the Framework Agreement does not apply unless the Buyer agrees to it in writing.”
It works only if the framework agreement exists and is sealed by the supplier, so sign that first.
Related terms
Read next
- Signing a Contract with a Chinese Company: The Clauses That Decide Whether You Can Enforce It
- China NNN Agreement Lawyer: NNN and Manufacturing Contracts Your Factory Signs
Sources
- Civil Code of the PRC (effective 1 January 2021), articles 480 and 488, full text on the Ministry of Justice site ↗
- Translations are mine and unofficial.
Holding a PI and about to pay?
Send us the PI and a line about your product. We reply in writing with the contract you need, the fixed fee and the delivery time.