WHAT IS DIFFERENCE BETWEEN A PO

1
WHAT IS DIFFERENCE BETWEEN A PO CONTRACT
2
WHAT IS DIFFERENCE BETWEEN A PO CONTRACT?

• A Contract is a mutual agreement between
  contracting parties that contains the essential
  elements of a contract
• A PO is normally only considered an offer to
  purchase something when issued it becomes a
  contract when the Vendor
• issues an acknowledgement accepting the POs Ts
  Cs without changes or,
• ships the goods or provides services in
  accordance with the PO.

3
WHAT IS DIFFERENCE BETWEEN A PO CONTRACT
(Contd)?

• POs are normally used to purchase goods.
• Contracts are normally used to purchase services.
• Make sure a contract is executed when needed
  (i.e. reduce risk exposure, identify
  responsibilities, define performance standards,
  remedies and expectations, etc.).

4
WHAT IS DIFFERENCE BETWEEN A PO CONTRACT
(Contd)?

• Texas State does use POs to purchase some
  services without executing a separate contract.
• If used without a contract, need to determine
  Universitys risk exposure.
• May need to add additional terms conditions to
  the POs standard Ts Cs boilerplate to
  address identified risks or other contract issues.

5
WHAT IS DIFFERENCE BETWEEN A PO CONTRACT
(Contd)?

• Purchases of goods are governed by the Uniform
  Commercial Code (UCC) (e.g. Law of Merchants)
  as adopted by the State of Texas.
• If a PO is used and issues arise that are not
  addressed in the POs Ts Cs, or the Sellers
  and Buyers TCs conflict (i.e. "Battle of the
  forms), if taken to litigation the UCC will
  normally apply.

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WHAT IS DIFFERENCE BETWEEN A PO CONTRACT
(Contd)?

• Services are governed by the contracts Ts Cs
  (e.g. within the 4 corners of the document)
  which have been previously mutually agreed upon
  by the contracting parties.
• If a contract is used to purchase services and
  issues arise, previous court cases and rulings
  (e.g. Common Law) will normally apply if taken to
  litigation.

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WHAT IS DIFFERENCE BETWEEN A PO CONTRACT
(Contd)?

• POs are usually of a short term (e.g. usually
  less than one year) or of a one-time nature.
• Contracts may be of a long term (i.e. more than
  one year) and may include multiple renewal
  options.

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WHAT IS DIFFERENCE BETWEEN A PO CONTRACT
(Contd)?

• PO Ts Cs are generally written to modify
  parts of the UCC that tend to favor the Vendor
  over the Buyer.
• Contract Ts Cs are usually much more detailed
  including setting out scope of work,
  communication and change management plans,
  deliverables, contingencies and performance
  standards and remedies, etc.,.

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WHAT IS DIFFERENCE BETWEEN A PO CONTRACT
(Contd)?

• At Texas State a PO is used to commit or encumber
  funds to pay for purchases.
• It is strongly recommended that a requisition be
  created and a PO be issued referring to the
  contract in order to commit funds to pay for the
  contracted goods or services within the current
  fiscal year.