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Negotiating a Purchase
8. Contract Issues
A contract exists whenever two parties agree to a deal. So it is vital to discuss all the key issues before you agree to buy.
8.1 Document the negotiations in writing.
- Verbal contracts are legally binding but difficult to prove in court.
- When a key point has been agreed, always put it down in writing. Write afterwards to confirm what was agreed.
8.2 At the start, agree with the supplier what type of contract will be used.
The contract may refer to the terms and conditions of either side, or a mixture of the two. Standard terms may include:
- Details of price, payment date, payment method and delivery.
- Guarantees covering a specified period.
- A clause giving the seller the right to retain legal ownership of the goods until fully paid for, or to delay delivery when hold-ups occur due to circumstances beyond his or her control.
- Clauses limiting the seller's liability (taking into account the buyer's statutory rights).
8.3 Agree payment terms.
- Avoid advance payments, unless you have a relationship of trust with the supplier.
8.4 Agree what will happen if problems arise.
For example, if goods are faulty, agree whether the supplier will replace individual faulty items or the whole batch.
- Agree whether replacement supplies will be delivered immediately or whether you will be given a credit note.
- Establish if replacement goods will be free, and who must pay for delivery.
- Agree penalties for infringements of critical delivery dates or quality standards.
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