Protect Yourself from Unsatisfactory Products with a Strong Contract

Buyers' Training
January 15, 2013 — 1,039 views  
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Any trade exchange between a buying and a purchasing party involves a number of steps. Firstly, both parties must decide on the rates of the goods. Next the decision on transporting the consignment safely to the desired destination is taken. In transit sometimes, the goods may suffer damage inadvertently. Also, the initially packed goods may not have good quality. Often it leads to a number of unpleasant exchanges between the two parties. In order to deal with these circumstances, a purchase contract is required.

Why is a Purchase Contract Important?

A successful trade generates a lot of revenue. So if such a complication ever arises due to unsatisfactory products being sold or purchased, strong and thorough purchase contracts can help resolve it. Such a contract lists, in detail, the clauses to address every situation. Purchase contracts categorically define the condition of the goods bought or sold, including their transportation details, and even guarantees their delivery in a sound state.

Such contracts enlist responsibilities of both the parties for a successful exchange. They also have provisions to deal with monetary compensation in case of breach of contracts. One needs to study the contract very carefully before signing it, as this can prevent many future complications and unpleasant customer-dealer relationship issues.

What Should a Good Purchase Contract Include?

As you can understand the significance of purchase contracts very well, you will appreciate the need to draw up one with great care and attention. A thorough purchase contract addresses a number of issues.

Firstly, a non-disclosure agreement needs to be signed to prevent unlawful sharing of trade secrets. Next, the contract must be signed by a legal representative of the company. Another important clause that you should look for in a good purchase contract is whether there is any scope of cancelling or rescheduling orders. The term for payment of penalty, in case of any delay in supply of the products, must be explicitly predetermined in the contract.

A good purchase contract must have provision for demand forecasts to ensure both short-term as well as long-term flexibility. It allows the purchaser to make enquiry as to when the seller will transfer the title of the goods to him. Good purchase contracts allow payments to be made after the delivery of the goods, but definitely within a pre-agreed time span. It must also include details of the fine for delay in payment.

In case you are a buyer, you must have the right to visit the manufacturing unit of the seller and check the legal status of the unit. A good purchase contract should allow you to do this. The mechanism to handle returns must be clearly specified in terms of deadlines and who bears the cost of the returning process.

Once you are ready with a thoroughly made purchase contract, you are in a much better position to begin trade exchanges. It will ensure a smooth process that will have long-term goodwill among the trading community.

Buyers' Training