Importance of the Terms of “Delivery and Payment” in the Purchasing Order



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How important about the terms of “Delivery and Payment” in the Purchasing Order? Describe the complete purchasing flow about delivery and payment. Supposing the emergence of delivery problem, any possible remedies can be done? Introduction: “Delivery and Payment” are important in the purchasing order. Since they reflect the place, time, ordered quantity and installment of delivery, end up related to the payment until the completion of purchasing process. Content: Purchasing is the formal process of buying goods and services. The Purchasing Process can vary from one organization to another, but there are some common key elements.

The process usually starts with a ‘Demand’ or requirements – this could be for a physical part (inventory) or a service. A requisition is generated, which details the requirements (in some cases providing a requirements speciation) which actions the procurement department. A Request for Proposal (RFP) or Request for Quotation (RFQ) is then raised. Suppliers send their quotations in response to the RFQ, and a review is undertaken where the best offer (typically based on price, availability and quality) is given the purchase order.

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Purchasing Process includes as usual 8 main stages as follows: 1. Requisitioning 2. Approving 3. Studying Market 4. Making Purchase Decision 5. Placing Purchase Orders 6. Receipting Goods and Services Received 7. Accounting Goods and Services 8. Receiving Invoices and Making Payment 9. Debit note in case of material defect A purchase order is a written authorization requesting a vendor to furnish goods to a purchaser. It is an offer from the purchaser to buy certain articles and is indicating types, quantities, and agreed prices for products or services the seller will provide to the buyer.

Sending a PO to a supplier constitutes a legal offer to buy products or services. The offer is accepted by the seller when she supplies the requested items. A contract is formed and the seller can expect payment in return for the delivered goods. It documents and communicates the transaction specifications. Finally, the numbered form also serves as documentation for invoice processing, and as an auditable source document supporting the incurred financial liability. Purchase orders (PO) can be of various types, including: • Standard – a one time buy; Planned – an agreement on a specific item at an approximate date; and • Blanket – an agreement on specific terms and conditions: date and quantity and amount are not specified. Purchase Orders are normally accompanied by Terms and Conditions which form the contractual agreement of the Transaction. The Supplier then delivers the products/service and the customer records the delivery (in some cases this goes through a Goods Inspection Process. An invoice is sent by the supplier which is cross-checked with the Purchase Order and Document which specifying that the goods received.

The payment is made and transferred. Delivery is the process of transporting goods as last few purchasing process. Most goods are delivered through a transportation network. Cargo (physical goods) are primarily delivered via roads and railroads on land, shipping lanes on the sea and airline networks in the air. Certain specialized goods may be delivered via other networks, such as pipelines for liquid goods, power grids for electrical power and computer networks such as the Internet or broadcast networks for electronic information.

The general process of delivering goods is known as distribution. The study of effective processes for delivery and disposition of goods and personnel is called Logistics. Firms that specialize in delivering commercial goods from point of production or storage to point of sale are generally known as distributors, while those that specialize in the delivery of goods from point of sale to the consumer are known as delivery services. Postal, courier, and relocation services also deliver goods for commercial and private interests. Delivery is concerned with the transfer of possession.

Possession involves the physical control of the goods by a person who may or may not have any ownership rights. By the “Sale of Good Act 1979”, the delivery of goods and the payment of the price are concurrent conditions. The seller must be ready and willing to give possession of the goods to the buyer in exchange for the price and the buyer must be ready and willing to pay the price in exchange for possession of the goods. Both parties are under a duty of fulfill their respective obligations in accordance with the terms of the contract.

Regarding place of delivery, the parties have the right to decide either expressly or impliedly where delivery will occur and whether the obligation is on the buyer to collect the goods or on the seller to send them to the buyer. Time of delivery, the time of delivery is usually important to the parties particularly in a commercial transaction, where the buyer may be buying to re-sell under another contract, either wholesale or retail, or buying materials for a production process.

In case of delivery of wrong quantity, the seller is under an obligation to deliver the correct quantity of goods ordered although minimal variations in amount will be tolerated as the law is not concerned with trifles. Delivery in installment, by the Act, “Delivery in installment” has 3 possibilities: the parties did not agree to deliver by installments, the parties did agree to deliver by installments of a non-severable contract and the parties agreed to deliver by installments of a severable contract. A payment is the transfer of wealth from one party (such as a person or company) to another.

A payment is usually made in exchange for the provision of goods, services or both, or to fulfill a legal obligation. The simplest and oldest form of payment is barter, the exchange of one good or service for another. In the modern world, common means of payment by an individual include money, cheque, debit, credit, or bank transfer, and in trade such payments are frequently preceded by an invoice or result in a receipt. However, there are no arbitrary limits on the form a payment can take and thus in complex transactions between businesses, payments may take the form of stock or other more complicated arrangements.

In law, the payer is the party making a payment while the payee is the party receiving the payment When the goods are to be delivered by the seller at his risk to a place other than that where they are sold, the buyer must take the risk of any deterioration in the goods incidental to the transit unless there is an agreement to the contrary. Commercial contracts are likely to include a clause stipulating an acceptable percentage tolerance in the amount delivered while expecting the price charged for the contract to reflect the amount actually received by the buyer.

The Act provides the buyer with a statutory right to examine the goods. Thus, unless there is an agreement to the contrary, when the seller delivers goods to the buyer, he must give the buyer (under request) a reasonable opportunity to examine the goods. The purpose of the examination is to ascertain whether the goods delivered comply with the contract and, in a contract of sale by sample. Issues relating to acceptance are listed below: 1. The buyer is deemed to have accepted the goods. a) when he intimates to the seller that he has accepted them, or (b) when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller. 2. When goods are delivered to the buyer, and he has not previously examined them, he is not deemed to have accepted them until he has had a reasonable opportunity of examining them for the purpose. (a) if ascertaining whether they are in conformity with the contract, and (b) in the case of a contract for sale by sample, of comparing the bulk with the sample.

Two possibilities of acceptance 1. This one is quite straightforward. The buyer has held the seller that he has accepted the goods. The words of acceptance must be clear and unequivocal. Normally, the signing of a delivery note merely acknowledges receipt of the goods and does not constitute acceptance. However, if the delivery note is phrased in terms of acceptance and the person who signs it has authority to accept the goods it may be binding. 2. It is more demanding, requiring two separate elements to constitute acceptance.

First, the goods must have been delivered to the buyer, and second, the buyer must then have done something with them that is inconsistent with the continued ownership of the seller. Supposing the emergence of delivery problem, possible remedies can be done. In the law of legal remedy, an order of specific performance is an order of the court which requires a party to perform a specific act, usually what is stated in a contract. It is commonly used in the form of injunctive relief concerning confidential information or real property.

While specific performance can be in the form of any type of forced action, it is usually used to complete a previously established transaction, thus being the most effective remedy in protecting the expectation interest of the innocent party to a contract. It is usually the opposite of a prohibitory injunction but there are mandatory injunctions which have a similar effect to specific performance. Under the common law, specific performance was not a remedy, with the rights of a litigant being limited to the collection of damages.

However, the court of equity developed the remedy of specific performance as damages often could not adequately compensate someone for the inability to own a particular piece of real property, land being regarded as unique. Specific performance is often guaranteed through the remedy of a right of possession, giving the plaintiff the right to take possession of the property in dispute. However, in the case of personal performance contracts, it may also be ensured through the threat of proceedings for contempt of court.

Orders of specific performance are granted when damages are not an adequate remedy, and in some specific cases such as land sale. Such orders are discretionary, as with all equitable remedies, so the availability of this remedy will depend on whether it is appropriate in the circumstances of the case. Conclusion: “Delivery and Payment” are important in the purchasing order. Since they reflect the place, time, ordered quantity and installment of delivery, end up related to the payment until the completion of purchasing process. In case of emergence of delivery problem, possible remedies can be done since Purchase Order is treated as contract.

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