PURCHASE ORDER: BASIS FOR ESTABLISHING A CONTRACTUAL RELATIONSHIP

Foreword

A purchase order (PO) is known as an official document outlining expectations between the supplier and the buyer in the purchasing process. A purchase order communicates exactly what you’re buying, how you want it produced, and how you want it shipped and handled. Effective purchase orders are absolutely needed when manufacturing abroad. A purchase order for services is like one for goods, but it is specifically for the procurement of services rather than physical products.

Nature of purchase order

The contractual relationship can indeed be established solely through the purchase order. This is particularly true in transactions where standardized terms and conditions between the parties are prevalent and where there is a clear understanding of how purchase orders function within the business ecosystem. When a purchase order is accepted by customers, it can serve as a legally binding agreement between the parties, outlining the terms and conditions of the transaction. The jurisdiction in which the transaction takes place may have specific legal requirements regarding the formation of contracts. It’s important to ensure that the purchase order meets these requirements to be enforceable.

Form of service contracts under Vietnamese laws

Freedom of contract remains a fundamental part of Vietnam’s law. Many commercial parties have their own standard terms of business which they seek to incorporate in the contracts they conclude. A service contract is typically formed through the mutual agreement of the parties involved. This agreement can be expressed verbally or in writing, although having a written contract is advisable for clarity and evidentiary purposes.

Actual cases show that customers usually issue Purchase Orders to instruct carriers to unload and move goods into their warehouse. Due to the carriers’ negligence, the goods were damaged during the unloading. As a result, the customers commenced a lawsuit against the carriers to recover damages incurred. As per the carrier’s allegation, there was no contract between the parties in this case; thus, mentioning the Purchase Orders of the customers to complain against them under the contractual relationship is unfounded. While this issue is still controversial, in light of Vietnamese laws, the form of service contract is not required to be duplicated in writing. Furthermore, the transaction history between them indicates that the parties only relied on Purchase Orders to fulfil their agreed obligations. On that basis, it should acknowledge the contractual relationship between the parties in this case.

ANHISA LLC AND OUR EXPERTISE

ANHISA LLC is a boutique law firm specializing in Dispute Resolution, Shipping and Aviation. Being the leading lawyers in various fields of law, our qualified, experienced, and supportive team of lawyers know how to best proceed with a case against or in relation to Vietnamese parties and are well equipped to provide clients with cost-effective and innovative solutions to their problems.

Regarding dispute resolution, we have represented Vietnamese and foreign clients in the resolution of disputes involving maritime, construction, commercial and civil matters. Our lawyers are well-equipped to offer services on a wide range of disputes and conflicts, whether cross-border or purely domestic, to appear before any Judges or Arbitral Tribunals. The firm is prepared to assist clients in designing the appropriate dispute resolution procedure to help resolve conflicts as efficiently and cost effectively as possible, which may involve combining elements of mediation and other methods such as arbitration.

AUTHORS

DANG VIET ANH

Managing Partner

Mobile: (+84) 983 467070

Email: anh@anhisa.com

NGUYEN THI TUYET MAI

Senior Associate

Mobile: (+84) 939 117398

Email: mai@anhisa.com

This article aims to furnish our clients and contacts with general information on the relevant topic for reference purposes only, without creating any duty of care on the part of ANHISA. The information presented herein is not intended to serve, nor should it be considered, as a substitute for legal or other professional advice.