Presentation is loading. Please wait.

Presentation is loading. Please wait.

WHAT IS DIFFERENCE BETWEEN A PO & CONTRACT. WHAT IS DIFFERENCE BETWEEN A PO & CONTRACT? A Contract is a mutual agreement between contracting parties that.

Similar presentations


Presentation on theme: "WHAT IS DIFFERENCE BETWEEN A PO & CONTRACT. WHAT IS DIFFERENCE BETWEEN A PO & CONTRACT? A Contract is a mutual agreement between contracting parties that."— Presentation transcript:

1 WHAT IS DIFFERENCE BETWEEN A PO & CONTRACT

2 WHAT IS DIFFERENCE BETWEEN A PO & CONTRACT? A Contract is a mutual agreement between contracting parties that contains the essential elements of a contractelements of a contract A PO is normally only considered an offer to purchase something when issued; it becomes a contract when the Vendor : –issues an acknowledgement accepting the POs Ts & Cs without changes; or, –ships the goods or provides services in accordance with the PO.

3 WHAT IS DIFFERENCE BETWEEN A PO & CONTRACT (Contd)? POs are normally used to purchase goods. Contracts are normally used to purchase services. Make sure a contract is executed when needed (i.e. reduce risk exposure, identify responsibilities, define performance standards, remedies and expectations, etc.).

4 WHAT IS DIFFERENCE BETWEEN A PO & CONTRACT (Contd)? Texas State does use POs to purchase some services without executing a separate contract. If used without a contract, need to determine Universitys risk exposure. May need to add additional terms & conditions to the POs standard Ts & Cs boilerplate to address identified risks or other contract issues.

5 WHAT IS DIFFERENCE BETWEEN A PO & CONTRACT (Contd)? Purchases of goods are governed by the Uniform Commercial Code (UCC) (e.g. Law of Merchants) as adopted by the State of Texas. If a PO is used and issues arise that are not addressed in the POs Ts & Cs, or the Sellers and Buyers T&Cs conflict (i.e. "Battle of the forms), if taken to litigation the UCC will normally apply.

6 WHAT IS DIFFERENCE BETWEEN A PO & CONTRACT (Contd)? Services are governed by the contracts Ts & Cs (e.g. within the 4 corners of the document) which have been previously mutually agreed upon by the contracting parties. If a contract is used to purchase services and issues arise, previous court cases and rulings (e.g. Common Law) will normally apply if taken to litigation.

7 WHAT IS DIFFERENCE BETWEEN A PO & CONTRACT (Contd)? POs are usually of a short term (e.g. usually less than one year) or of a one- time nature. Contracts may be of a long term (i.e. more than one year) and may include multiple renewal options.

8 WHAT IS DIFFERENCE BETWEEN A PO & CONTRACT (Contd)? PO Ts & Cs are generally written to modify parts of the UCC that tend to favor the Vendor over the Buyer. Contract Ts & Cs are usually much more detailed including setting out scope of work, communication and change management plans, deliverables, contingencies and performance standards and remedies, etc.,.

9 WHAT IS DIFFERENCE BETWEEN A PO & CONTRACT (Contd)? At Texas State a PO is used to commit or encumber funds to pay for purchases. It is strongly recommended that a requisition be created and a PO be issued referring to the contract in order to commit funds to pay for the contracted goods or services within the current fiscal year.


Download ppt "WHAT IS DIFFERENCE BETWEEN A PO & CONTRACT. WHAT IS DIFFERENCE BETWEEN A PO & CONTRACT? A Contract is a mutual agreement between contracting parties that."

Similar presentations


Ads by Google