Reviewing a purchase order with terms on the back

A purchase order arrives with terms on the back, or a link to them, that contradict the quotation the supplier sent, and the supplier delivers. Which set of terms governs the contract is then decided by the sequence of documents. I review the purchase order and its terms from the supplier's side and return them marked up with a written explanation of which terms apply, what they commit the supplier to, and how to respond so that the supplier's own terms govern the next order, for a fixed fee of £495 in three working days.

Who this is for

Manufacturers, distributors, contractors and service suppliers in England and Wales that receive purchase orders from customers with the customer's terms attached, and want to know which terms apply to the orders they have accepted and how to make sure their own terms apply in future. The supplier and the customer are businesses.

What to look for in a purchase order with terms on the back

The battle of the forms: whose terms won

Where a supplier quotes on its terms and the customer orders on its own, the contract is on the terms of the last document sent and accepted by conduct, usually the purchase order that the supplier accepted by delivering. In Tekdata Interconnections Ltd v Amphenol Ltd [2009] EWCA Civ 1209 the Court of Appeal confirmed that the traditional offer and acceptance analysis applies unless the parties' conduct shows a different intention. The review traces the sequence of quotation, order, acknowledgement and delivery for the orders in question, says which terms govern them, and drafts the acknowledgement that makes the supplier's terms the last shot for the orders to come.

Delivery, time of the essence and liquidated damages

Customers' purchase order terms make the delivery date of the essence, entitle the customer to cancel for late delivery, and charge liquidated damages for each week of delay. The review checks the delivery terms against the supplier's lead times, asks for time not to be of the essence unless agreed for a specific order, for delay caused by the customer's drawings, approvals or free-issue materials to extend the date, and for liquidated damages to be capped and to reflect the customer's likely loss, since a sum out of all proportion to its legitimate interest is unenforceable under Cavendish Square Holding BV v Makdessi [2015] UKSC 67.

Quality, acceptance, rejection and the warranty period

The customer's terms extend the implied terms of quality and fitness in section 14 of the Sale of Goods Act 1979 into a warranty against defects for a period from the customer's own use of the goods, allow rejection at any time within it, and require the supplier to repair or replace at its cost. The review checks the acceptance procedure, since under section 35 of the Sale of Goods Act 1979 a buyer that accepts goods loses the right to reject for that breach, asks for a defined inspection period after delivery, for the warranty period to run from delivery, and for the supplier's liability to be limited to repair, replacement or credit.

Cancellation, changes and the customer's set-off

Purchase order terms give the customer the right to cancel or vary an order at any time, paying only for work done, and the right to set off any sum it claims against the supplier's invoices. The review asks for cancellation to carry payment for materials ordered and work in progress plus a proportion of the margin, for changes to go through a change procedure with a price and date adjustment, and for set-off to be limited to sums agreed or determined, so that a disputed claim does not stop payment of an undisputed invoice. Interest under the Late Payment of Commercial Debts (Interest) Act 1998 applies where the customer's term is not a substantial remedy.

Liability, indemnities and intellectual property in the customer's terms

The customer's terms will exclude its own liability, require the supplier to indemnify the customer for product liability, infringement and breach, and assign to the customer any intellectual property in the goods, including designs the supplier developed for other customers. The review checks the indemnities against the supplier's insurance, asks for a cap and for consequential loss to be excluded, and limits the intellectual property clause to designs created specifically for the customer and paid for, so that the supplier's own drawings, tooling designs and know-how, protected under section 11 of the Copyright, Designs and Patents Act 1988 and as unregistered designs, stay with the supplier.

Payment terms, invoicing and retention of title

Purchase order terms set long payment periods, invoicing procedures that reject non-compliant invoices and restart the clock, and reserve the right to withhold payment for goods not yet approved. The review checks the payment period, the invoice requirements, the treatment of partial deliveries, and the supplier's retention of title, which the customer's terms will remove and which section 19 of the Sale of Goods Act 1979 allows the supplier to reserve until payment, and drafts the supplier's acknowledgement so that its own payment and retention of title terms are the ones that apply.

What it costs

Standard review, £495. Marked-up document and a written explanation of the changes. Three working days.

Buying online forms the engagement on payment. The scope is what the contract review page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• Your own contract returned with my amendments as tracked changes, plus a clean version with every change accepted, ready to send to the other side
• Comments in the document where a point needs explaining
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, marking the points I would hold firm on and the ones that are negotiable
• A view on what is normal market practice and what is the other side pushing their luck
• One round of follow-up questions by email, included

What is not included

• Negotiating directly with the other side, which I quote separately once I know who is on the other side. Where the other side is willing to share a live document, I can work in that document directly
• Drafting a replacement contract from scratch
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Disputes about a contract that is already signed

Questions I am often asked

We quoted on our terms and delivered against their order. Whose terms apply?

On the traditional analysis, the customer's, because its purchase order was the last document and you accepted it by delivering. The review traces the documents for your orders and drafts an acknowledgement that makes your terms the last shot in future.

Their terms let them cancel at any time. Can they?

If their terms govern, yes, on the terms they set, which may pay you for work done and nothing more. The review asks for cancellation to carry payment for materials, work in progress and a share of margin, and makes sure your own terms deal with it for future orders.

Their terms take the IP in everything we make for them. Does that include our own designs?

As drafted, it may, and customers' terms are written that widely. The review limits the assignment to designs created specifically for the customer and paid for, and keeps your drawings, tooling designs and know-how yours.

Related guidance and services

• Contract review, £495, the service this page describes
• Terms and conditions drafting, £995
• Reviewing a supplier agreement from a large customer
• Reviewing a supplier quality agreement

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.