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Do Your Company’s Sales and Purchasing Documents Create Unnecessary Legal Risk?

December 11, 1995

Jeffrey L. Hudson

If your company manufactures products or buys and sells goods, a string of recent lawsuits suggests that you should take a close look at your sales and purchasing forms and procedures. Proper sales and purchasing documentation could potentially save your company thousands of dollars in unnecessary legal costs.

Several lawsuits our firm has recently defended involved situations where a seller failed to respond properly to a purchase order. The seller simply began to work on the project, not realizing that the purchase order’s fine print bound them to unfavorable terms and conditions. Later, when the customers sued over supposedly defective work, the sellers found themselves defending against claims and damages never previously considered.

In two recent cases we have defended, the buyers claimed damages greater than the sales price. In one case, a seller found itself subject to the laws of a foreign jurisdiction. In another case, a buyer denied ordering additional services and refused to pay for them, even though the seller had already completed the work! Representing the seller, we prevailed in one case that went to trial (the other cases settled). However, these problems could have been avoided.

Many companies – even highly successful ones – use outdated or “off the shelf” forms and do not pay enough attention to documentation. Simplified procedures and up-to-date sales and purchasing documentation can reduce risk and limit liability and collection costs.

What to do? 1) Review your company’s sales and purchasing forms. If your forms have not been periodically revised, new terms can be added which will benefit your company when conflict inevitably occurs. 2) Implement procedures to make sure your company does not find itself accidentally subject to unfavorable terms and warranties. Train your sales and purchasing professionals to spot problems before they develop.


Article Originally Published: Winter 1995

The information contained in this article is not intended to be legal advice. Readers should not act or rely on this information without consulting an attorney.