This morning, there was an article in the Proformative Member Digest that peaked my interest. (Wayne Spivak, What Do You Do When the Purchase Order Terms Are Outrageous.) The writer had received a Purchase Order from a client to look over. The vendor’s PO contained 20 pages of terms and conditions. Many of the conditions were ridiculously harsh, including an indemnity clause, insurance requirements, confidentiality clauses, and other major subjects that do not have any place in a PO.
The point I made was that the vendor had really sent a Master Sales Agreement disguised as a Purchase Order. This is not all that uncommon. Here are points to remember if you are ever in the same situation, some of which were in my reply to Wayne’s Post:
There are things to be said for a Master Sales Agreement. It locks in the terms and condition for a period of time, usually a year or more, so that they do not vary with every purchase order.
A Master Sales Agreement is a major document that should be negotiated at a high level by knowledgeable experts. It should not be disguised as a simple Purchase order.
Negotiating an MSA may be time consuming. You are investing time you will not have to spend later. If the process drags on too long, that tells you something about the reasonableness of the people on the other side (assuming you are being reasonable.) If there is continued insistence on onerous Ts&Cs, perhaps you have chosen the wrong party with which to deal. Unless the vendor is sole source for what you need, you should move on or at least carry on parallel negotiations.
Somewhere on the other side is an advocate for doing business with you. Make sure that person knows that the deal will go south if whoever is incorporating those onerous requirements is allowed to control the process.
This is pretty egregious example of a purchase order from Hades, but they are out there.
This is a sales contract – a purchase order from 2600 BCE