Purchase terms for a manufacturer buying components

A manufacturer buys components that are incorporated into a product it then sells under its own name, and when a component fails the manufacturer's customer does not care whose part it was. Purchase terms have to make the manufacturer's order govern, fix the specification and the quality standard, make delivery on time, allow inspection and rejection, and put warranties, recall costs and tooling where the manufacturer needs them. I draft those terms for a fixed fee of £995, delivered in five working days.

Who this is for

Manufacturers, assemblers and engineering businesses in England and Wales buying components, raw materials, sub-assemblies and packaging from UK and overseas suppliers on purchase orders, schedules and supply agreements. These are business-to-business terms for the buyer's side.

What matters in a manufacturer's purchase terms

Making your terms the ones that apply

Suppliers send their terms with every quotation and acknowledgement, and the last document sent before performance tends to win. The terms should say that the order is an offer on the buyer's terms only, that the supplier's terms are excluded, that acceptance is by written acknowledgement or by starting to perform, and that no variation binds the buyer unless agreed in writing. The purchasing process has to match: orders that reference the terms, and acknowledgements checked for counter-terms.

Specification, quality and change

The terms should require goods to conform to the specification, drawings and samples, to the standards and certifications stated, and to the quality and fitness for purpose that sections 13 and 14 of the Sale of Goods Act 1979 imply, and should say that the supplier may not change materials, processes or sources without the buyer's written approval. Where the supplier holds approval status or certification, the terms should require it to be maintained and any lapse notified.

Delivery, inspection and rejection

Delivery dates should be of the essence with the buyer entitled to cancel and to recover the cost of substitute goods if they are missed, and the terms should say that risk passes on delivery to the buyer's site, that the buyer may inspect and test on receipt and within a stated period after, and may reject non-conforming goods for replacement or refund with the supplier collecting them. Latent defects found later, including after incorporation, should remain the supplier's responsibility for the warranty period.

Warranties, recall and liability

The terms should take a warranty that goods are free from defects in materials, workmanship and design for a stated period from delivery or from the buyer's product's sale, that the supplier will replace or credit defective goods and bear the costs of removal and refitting, and that where a defect leads to a recall or a claim from the buyer's customer, including strict liability as producer under Part I of the Consumer Protection Act 1987, the supplier indemnifies the buyer for the costs. The supplier's liability should not be capped below the value the buyer is exposed to, and the supplier should carry product liability insurance the terms require.

Tooling, price, payment and compliance

Tooling paid for by the buyer belongs to the buyer, is marked as such and returned on request, and the terms should say so. Prices are fixed for the order or the period stated, with no surcharges unless agreed, and payment is on the buyer's stated terms; the Late Payment of Commercial Debts (Interest) Act 1998 lets the parties agree the period provided it is not grossly unfair to the supplier, and the Procurement Act 2023 imposes thirty-day payment where the buyer is in a public sector supply chain. The terms should require the supplier to comply with the Bribery Act 2010 and section 54 of the Modern Slavery Act 2015 and to give the information the buyer needs for its own statements, and should allow the buyer to terminate for insolvency or breach and to set off sums due.

What it costs

Customer or supplier terms and conditions, £995. One set of terms, customer-facing or supplier-facing, drafted for your business. Five working days.

Review of your existing terms, £495. You already have terms and want them checked and brought up to date. Returned marked up with my amendments and an explanation of the changes. Three working days.

Email me at geoffrey@caesar.co.uk with what you need and any documents, and I will confirm the scope and the fee in writing, usually the same working day.

What you get

• A full set of bespoke terms drafted for your business, reflecting the legal requirements that apply to your business and sector
• A note in plain English explaining the terms I have drafted for you
• Liability, payment, termination and IP provisions that protect your position and are drafted to withstand scrutiny from the other side
• Guidance on how to incorporate the terms properly
• Your questions and comments answered by email or phone
• One round of amendments to finalise the terms ready for use

What is not included

• Negotiating your terms with individual customers (I am happy to quote for this as an additional service if required)
• Sector-specific regulatory compliance beyond the contract terms themselves
• Website privacy notice and cookie compliance, which I quote separately
• Terms governed by the law of another country
• Tax advice

Questions I am often asked

A component failed in the field and our customer wants us to pay for the recall. Can we pass it on?

If the purchase terms include a warranty on the component and an indemnity for recall and customer claims arising from a defect, and those terms applied to the order, yes. Whether they applied is the battle-of-forms question, which is why the ordering process matters.

The supplier changed a material without telling us. Where do we stand?

If the terms prohibit changes to materials, processes or sources without written approval, the goods do not conform and the supplier is in breach, whatever its own terms say about equivalents.

The supplier says its terms cap its liability at the price. Do they?

Only if its terms govern the order. If your purchase terms were the offer and the supplier accepted by performing, your terms apply and the cap is not in them. Keep the paper trail.

Related guidance and services

• Terms and conditions drafting, £995, the service this page describes
• Contract review, £495
• Terms and conditions for a packaging supplier
• Purchase terms for an e-commerce business buying from overseas suppliers

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.