Keys to Understanding and Writing Purchasing Contracts

Understand the legal aspects of writing purchasing contracts and reduce liability for your company.

Purchasing law is an emerging legal area invoking a variety of legal doctrines including Article 2 of the Uniform Commercial Code, treaties such as CISG and the New York Convention, common law concepts of impossibility, products liability, insurance coverage law, civil law concepts of good faith and fair dealing, antitrust, trade secret, and choice of law and forum rules, among others. Against this backdrop, a supply chain contract must be a sturdy document that limits risk, is clear and concise, and allows the company’s rights to be enforced as anticipated. However, the business relationship being documented by the supply contract is constantly changing. The products sold, the companies involved, and the basic assumptions are often different one or two years into the project. Additionally, obligations and issues outside the contract, whether it’s a hurricane or product liability suit, often impact how a contract functions.