Vol. 10 No. 12		December 1991

It may just be a matter of administrative convenience. It may be the product of misinformation or misjudgment in the purchasing department. Whatever the reason, it is not uncommon for large institutional clients to seek to retain you under a standard purchase order form. The expectation is that you will sign a copy, return it before the ink is dry on the page, and eagerly set to work.

There are two, potentially serious problems to consider before you reach for your pen. First, purchase orders are subject to a set of standard terms and conditions that have little, if anything, to do with the delivery of professional services. Second, purchase orders can be poor substitutes for real agreement. They tend to bypass the vital need you and your client both have to arrive at a clear, mutual understanding about what your responsibilities are going to be and what responsibilities properly belong to someone else.

The terms and conditions printed on the reverse side of most purchase orders are not the product of the assembled legal might of your client they may appear to be. They are extracted, often verbatim, from the Uniform Commercial Code--a document intended to facilitate, through standardization, the free flow of commerce throughout the United States. They apply to the routine procurement of supplies, materials, and non-professional services. They do not apply, and they were never intended to apply, to what you do as a professional.

Yet, if you cast about in your contract files, you are likely to find more than one project which has been carried out on the basis of a client purchase order. If you cast about among your staff, however, you are unlikely to find anyone who has even the foggiest notion of the terms and conditions under which you agreed to work. Take a close look. You will discover provisions you would otherwise never accept and responsibilities you probably could not meet if you were called upon to do so.

Many of these provisions are uninsurable, the warranties and guarantees, for example. Others represent commitments that may be excluded from coverage under the particular professional liability insurance policy you have in place. Nevertheless, if it were to come to a legal showdown, the purchase order you sign may prove to be a binding and enforceable contract. The issue, at any rate, is arguable, and while the attorneys argue, you lose time, money, and a good deal of your normally placid composure.

What if you simply don't sign it? You could still have a problem. If you read the very first clause, you will find yourself instructed that the terms and conditions apply as if unaltered, whether you sign the face page or not--whether you have taken the trouble to modify some of the more onerous of the terms or not. All you have to do is to start work.

The best thing you can do with the next purchase order that crosses your desk is to strike all of the provisions on the reverse side. Then, sign it and return it to your client. Forward it with a letter pointing out that its conditions are not applicable to professional performance, that some, in fact, are uninsurable. Attach your own standard terms and conditions, and suggest that they might serve as a more appropriate basis for arriving at a workable agreement. You might even go so far as to highlight a few of the more unreasonable provisions in the purchase order and use them to illustrate your point in some detail.

What about the very first clause? Strike that one, too. In the absence of evidence to the contrary, most courts will assume that your contracts have been fairly bargained for, that they represent the product of negotiations conducted in good faith. By striking the terms and conditions from your client's purchase order, you make it clear that you intent to pursue your opportunity to negotiate an equitable agreement. It may be your only opportunity to establish a realistic, common understanding about the extent to which your expertise might reasonably be expected to contribute to a successful outcome.

It is not a dark secret to most clients that your responsibilities as a professional differ substantially from those imposed on paper clip manufacturers and supplies of fresh aprons for the company cafeteria. Where you have cause for valid concern over the nature of the obligations you are being asked to assume, most clients would expect you to seek clarification. Most will respond reasonably to your concerns--even on small projects where everyone would just as soon get the paperwork out of the way and get on with the task at hand.

The fact is, the procedures which govern the actions of the purchasing department are probably not the controlling influence. Purchase orders are often issued, by way of clerical routine, to every "vendor." Clearly you are not a "vendor." But, unless a purchase order has been issued, it may be that a relatively complex system of accounting will break down as soon as you submit your first invoice.

Where this is the case, it is not so much the terms and conditions that are important, but the purchase order number. If so, your client should have little difficulty with the concept of negotiating fair and equitable alternatives.

If, on the other hand, the standard terms and conditions are precisely what your client considers to be essential, there is a real problem. It is one best brought to light and cleared from the table before you even think about starting work.

Should you fail in your efforts to deal with the issues in a reasonable way, you have a business decision to make. Consider it carefully, for the risks involved can be substantial. Keep this in mind, as well: If you proceed with the work on your client's terms, you may only be deferring your differences until a later day. Later, what might have been reasonable at the outset may have little bearing on how those differences are eventually resolved. There are times when casting your net in other waters can be the most viable option you have.