Legal Definitions - purchase order

A purchase order is a formal document issued by a buyer to a seller, indicating an intent to purchase specific goods or services. It details the types, quantities, and agreed-upon prices for products or services. Essentially, it serves as an offer to buy, and once accepted by the seller, it forms a legally binding contract. It also typically specifies payment terms, often allowing for payment to occur after the goods or services have been delivered.

Here are some examples to illustrate the concept of a purchase order:

• Example 1: A Restaurant Ordering Supplies

  A popular local restaurant needs to restock its kitchen with fresh produce, meats, and dairy for the upcoming week. The restaurant manager creates a purchase order and sends it to their primary food supplier. This document lists the exact quantities of each item needed (e.g., 50 lbs of organic tomatoes, 20 lbs of sirloin steak, 10 gallons of milk), the agreed-upon prices for each, and specifies that payment will be made within 30 days of delivery. By issuing this purchase order, the restaurant formally authorizes the supplier to deliver these goods, committing to pay for them later according to the specified terms.

• Example 2: A School District Procuring New Technology

  A school district decides to upgrade its computer labs and needs to acquire 100 new desktop computers. After receiving bids from several technology vendors, the district's procurement department issues a purchase order to the chosen vendor. This PO outlines the specific computer models, their configurations, the unit price, the total cost, and the required delivery and installation schedule. It also includes payment terms, such as "net 45 days," meaning the district will pay the invoice 45 days after the computers are delivered and accepted. This purchase order serves as the official authorization for the vendor to supply the computers and establishes the district's obligation to pay.

• Example 3: A Construction Company Buying Building Materials

  A construction company is building a new office complex and needs a large quantity of steel beams and concrete. The project manager sends a purchase order to a building materials supplier. The PO details the precise specifications, dimensions, and quantities of the steel beams, as well as the volume and type of concrete required. It also states the delivery schedule for different phases of the project and the payment terms, perhaps requiring a 50% down payment and the remaining 50% upon final delivery and inspection. This document legally binds the supplier to provide the materials as specified and obligates the construction company to make payments as agreed.