Waiving Performance Requirements in Purchasing Contracts

Buyers' Training
September 27, 2012 — 1,070 views  
Become a Bronze Member for monthly eNewsletter, articles, and white papers.

Many purchasing contracts include provisions to ensure the performance of
a purchased product. These are generally known as performance
requirements
 and are included in the vast majority of purchasing
contracts. Such requirements are added to contracts to ensure that purchasers
receive a high-quality product. These provisions are especially important if
contractors are purchasing products which have not yet been tested or released
on the consumer market. 

Despite their many advantages, it is occasionally necessary to waive
performance requirements in a purchasing contract. This may be done because it
is simply not possible that a product will meet basic performance provisions.
Such waivers may also be issued if a purchaser has a long-standing relationship
with a manufacturer. You should consider the following before choosing to waive
performance requirements in a purchasing contract. 

Your Relationship with the Manufacturer

If you have a long-standing relationship with a manufacturer and have
consistently received quality products from that manufacturer you may wish to
waive a performance requirement. This may be seen as a good-faith measure on
your part. You may also need to waive performance requirements if you are
asking a trusted manufacturer to produce a product for you under a tight
deadline. 

The Nature of the Product Being Purchased

On occasion, businesses need to purchase products that have not been released
on the consumer market and have not undergone lengthy quality testing. In these
situations, a manufacturer may be unwilling to sell products unless a
performance requirement is waived. This type of waiver is sometimes used by
companies who undertake product development and design but do not own their own
manufacturing facilities. It can be useful for the initial run of a new
product. 

Potential Liability Issues Connected with Faulty Products

Before you waive a performance requirement in a purchasing contract, you should
carefully weigh any liability issues that you might face if you receive faulty
products. This is particularly important if you are purchasing components for
use in consumer goods or construction. Avoid waiving performance requirements
if you will be liable for product faults that the end user encounters. 

State and Federal Government Requirements 

Depending on the industry you work in, the state or federal government may
prohibit you from waiving performance requirements. If you are a government
contractor and will use purchased items to fulfill a government contract, you
must go through established channels in order to have a performance requirement
waived.

Buyers' Training