| ***Disclaimer: We are not lawyers; this information should not be taken as legal advice. If you have legal questions, please direct them to a professional.*** |
When issuing a Purchase Order (PO) to a supplier, you may want to include an agreement or a contract. Enforcing international agreements or contracts is challenging, so if you feel your transaction needs that level of protection, consult a lawyer.
Creating a detailed agreement that you can include with your purchase order can give you peace of mind and reduce significant issues, even if it is not easily enforceable by law. The agreement's purpose is to set clear expectations for product quality and outline all the details of the order. Agreements also show your attention to detail, thoroughness, and a sense of valuing the business relationship between supplier and buyer as a serious one where details matter.
What to include in your Agreement
We suggest including a detailed section for each of these topics:
Product Specifications: Outline all the critical aspects of your product, including size, weight, color, material, accessories, etc.
Costs: List the order quantity, cost of goods per item, and the total order cost.
Production Time: Include the date you and the supplier have agreed that the goods will be ready.
Inspection details and process for defects: If you use a third-party inspection service, you can use this section to outline what the inspection will cover. You can also include what constitutes a pass or fail and the consequences of a failure.
Packaging and Labeling: List the packaging and labeling requirements for your product packaging and any master carton markings if you need them.
Shipping: Outline the shipping terms and/or shipping instructions.
Confidentiality agreements: Include any details you want to protect, such as artwork, custom product designs, photography, etc.
Include anything you think is important to you and your product, and exclude anything you do not need. Here is an outline you can use as a guide:
| Purchase Order Contract Template |
| Jungle Creations, known as “First Party”, agrees to enter into this Purchasing Contract with {FACTORY NAME HERE} known as “Second Party”. |
| This agreement is based on the following provisions: |
| Production |
| The Second Party agrees to produce the following goods: |
| Insert all information about the product specification here leaving out no details out, including all of the product materials and features you have discussed previously for your quote. Also, include any specific packaging or labeling requirements for the product. |
| - Order quantity / Number of items |
| - Insert Product details |
| - Insert Product details |
| - Insert Product details |
| - Insert Product details |
| - Insert Product details |
| Total cost: |
| The Second Party agrees to the costs of $XXX (specify all costs for all variants etc.) |
| If production time exceeds the agreed upon production time (XX days) – the First Party requires advanced notification of at least 3 days to respond appropriately. If production is delayed by more than 7 days without agreed-upon conditions, the First Party reserves the right to enforce a 5% discount on the order for every 7 days that production is delayed. |
| If any flaws are discovered during production that does not meet the agreed-upon specifications, the Second Party agrees to discount products, fix flaws, or replace the units. The course of action if flaws arise is to be determined at the sole discretion of the First Party. The First Party will make every effort to find an agreeable solution to maintain a quality relationship with the Second Party and expects the same in good faith. |
| Inspection |
| The first party reserves the right to a 3rd party inspection. The Second Party agrees to an Internal Inspection required by the First Party. The points of Inspection required are: |
| - Picture of raw materials |
| - Pictures of [product] as they are being manufactured |
| - Pictures of [product details] |
| - Picture of labels [insert label description] |
| - Picture of the first Master Carton loaded with units – with box lid open and a picture from each side |
| - Picture of the full shipment with all Master Cartons |
| If the production fails a third-party inspection, the Second Party agrees to pay for a second inspection before shipping the goods. |
| The Second Party also agrees to send all of the above photos to the First Party as frequent updates on the production status. |
| Shipping |
| As agreed upon previously, it is expected that the Second party delivers the items to {INSERT ADDRESS HERE]. The Second Party agrees to provide the first party with tracking information as soon as it becomes available. The first party reserves the right to ship part or all of the production via air shipping, the first party will notify the second part of the details associated with this in a timely manner. The prices shall not exceed the following: |
| 10 cartons, express (2-4 days) – $XXX EDIT AS REQUIRED |
| 90 cartons, air cargo / ocean freight (XX days) – $XXX EDIT AS REQUIRED |
| The Second Party also agrees to print Master Carton Labeling in accordance with the list below: |
| - {product name} |
| - Case Quantity: |
| - Made in China |
| - Gross Weight: (please use actual weight in Kg) |
| - Box Dimensions: (please use actual dimensions in cm) |
| Photography |
| The Second Party agrees to send a sample by air to the First Parties' photographer. |
| Confidential Information |
| By doing business with the First Party, the Second Party agrees to keep any and all information related to their business relationship confidential from other potential customers. The Second Party is not allowed to use any artwork, design, or images from work done with the First Party to market similar products to other potential customers. This includes use on Alibaba.com, private conversations through email, Skype, or other messaging applications, Globalsourcing.com, Amazon.com, and any other method of communication. The Second Party agrees not to disclose any agreed-upon pricing related to our agreement with other potential customers in any form. |
| Payment |
| 30% ($XXX) is due immediately, and 70% ($XX) is due at shipment. Shipping fees ($XXX) will be paid with the final payment after the goods are ready for shipment. |
| {FACTORY NAME AND ADDRESS HERE} |
| BENEFICIARY'S Payment Information: {BANK ACCOUNT OR PAYPAL EMAIL ADDRESS HERE} |
| This agreement is entered into on {DATE} by {YOUR COMPANY NAME} and {SUPPLIER NAME} |
| _____________________________ ________________________ |
| (Your Name, Role within Company, Company Name) (Date) |
| _____________________________ ________________________ |
| (Authorized Signee, Role within Company, Company Name) (Date) |
| Appendix |
| Use an appendix for any additional documents or images attached to illustrate the agreement terms. |
| Reference in the main body as, Figure 1, Figure 2, etc. |