This contract tip is about how a simple email reply from a vendor could change the contract terms. Here's how that happens.
Typically a customer sends its purchase order (PO) to the vendor as the offer and the vendor accepts. But sometimes, instead of accepting, the vendors ask for a change. A vendor may reply, "Thanks for the PO. We accept if you increase the price by 7% and change to 10-day payment terms."
Some customers ignore these emails, thinking that the PO controls. They may be wrong. That email may be counteroffer and binding on the customer even if never explicitly approved.
There are two sets of rules in the U.S. that govern counteroffers - common law rules that govern services contracts and the Uniform Commercial Code for goods.
Under common law, the counteroffer may be deemed the last document exchanged and binding under the last shot rule. Under the UCC Section 2-207, the offeror is deemed to accept a counteroffer if not rejected within 10 days when both parties are merchants (but with limits).
My advice for customers? Reply or expressly reject every vendor counterproposal. If a change is needed, issue a new or amended PO.
What's your guidance to your team sending out POs about replies from vendors?
