Using purchasing terms and conditions: why your company needs them too

Purchasing terms and conditions are your own terms at the time of purchase — a mirror of the terms of supply. At the time of contract signing: “battle of forms” — which terms apply? Whoever refers first avoids switching later. For SMEs: purchasing terms and conditions provide a negotiating position with suppliers and protect against untenable delivery clauses. Below, the why, content, and how to enforce them.

The short answer

• What: your own terms and conditions when purchasing from suppliers.
• Mirror of: terms of delivery (seller's side).
• Battle of forms: in the contract, both parties refer to their own terms and conditions.
• First shot rule: whoever refers first prevents a switch (Art. 6:225 paragraph 3 BW).
• Important clauses: quality, delivery time, price, liability, warranty.

Why purchasing terms and conditions?

Without own purchasing terms and conditions: the seller's terms of delivery apply. This often means:

• Limited liability of the supplier.
• Long delivery times without penalty.
• Retention of title (you are not the owner until payment).
• No guarantee or quality requirements.
• Unsustainable payment terms (in advance).

With your own purchasing terms: you help determine the rules of the game.

Battle of forms

In a contract, both parties refer to their own terms and conditions. What applies?

First shot rule (art. 6:225 paragraph 3 BW)

Whoever first refers to terms and conditions (and actually provides or makes those terms and conditions available) prevents the counterparty from switching — unless the other party explicitly rejects this.

Practical

• Send purchase order with purchasing terms and conditions: you first shot.
• Seller confirms order without rejection: your terms apply.
• Seller confirms with their own terms and conditions: new offer from seller.
• You accept the seller's confirmation: their terms apply.

Strategy: refer early, send conditions along, explicitly reject delivery terms.

What is in it?

1. Scope of application:all purchasing, or specific product/service categories.
2. Order/acceptance: how the order is placed.
3. Price: fixed, or indexation — penalties for price increases.
4. Delivery time: fixed, penalty for exceeding.
5. Quality: specifications, test rights, certification.
6. Warranty: minimum duration (1-2 years is common).
7. Supplier liability: for damage caused by product or service.
8. Payment: term (30-60 days after receipt).
9. Transfer of ownership: upon delivery or payment.
10. Complaints procedure:time limit for reporting.
11. Dissolution: grounds for termination.
12. Applicable law: Dutch law.

Important clauses for SMEs

Penalty for late delivery

For critical production processes: contractual penalty (€100-€1,000 per day) and right to replacement procurement.

Quality test

Right to inspect within 30 days, right of return if specifications are not met.

Liability for damages

Supplier liable for damage caused by product (product liability) — do not accept a liability limiting clause.

IP claims

The supplier declares that it does not infringe any intellectual property rights and indemnifies the buyer against any potential claim.

How to enforce?

• Include or refer to purchasing terms and conditions with every order.
• For major suppliers: negotiate terms in the framework contract.
• In case of refusal: choose another supplier or accept a compromise.
• Standard template for purchasing emails with automatic referral.

Wim's purchasing terms

Wim imports electronic components — purchasing conditions essential:

• Quality specifications with test rights.
• Penalty €500/day for late delivery (production process).
• Supplier product liability — no limitations.
• Payment 45 days after receipt of goods.
• Minimum 2-year warranty.

For German supplier: terms and conditions translated into English, explicitly reject his General Terms and Conditions (AGB).

Honest recommendation

For every SME that purchases on a structural basis: its own purchasing terms and conditions are essential. Draft them once by a legal expert (€500-€1,500), and then use them for years to come. Refer early and consistently. For large suppliers: negotiate. For regular small purchases: a standard reference suffices. Combine with a good purchasing process (requests for quotation, price comparisons) for maximum value.

For other topics: terms of delivery, drafting general terms and conditions , and AVB.

Frequently Asked Questions