Is a purchase order between a buyer and a manufacturer binding if no money has changed hands? Is it just an intent tio buy?
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Is a purchase order between a buyer and a manufacturer binding if no money has changed hands? Is it just an intent tio buy?
My customer decided to cancel his order with another manufacturer in favor of the manufacturer I represent. They are in Chicago the sellerand my customer the buyer is in California.
They are threatening to sue if he cancels his order. Is a purchase order binding or just an intent to buy? There have been no signed contracts.
Asked on July 22, 2016 under Business Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
A purchase order IS a contract: it is a written agreement that in exchange for selling X items or services to the customer, the customer will pay $Y. There are definite terms; there is an offer (to do something) and acceptance (agreeing to it); there is a "meeeting of the minds" (both parties understand the terms); and there is an exchange of consideration: an exchange of a promise to pay for a promise to provide goods/services. All the elements of a contract are present, and so this forms an enforceable contract. The manufacturer may sue the customer if the customer does not buy.
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