A Purchasor's Checklist for necessary Terms and Conditions in an Agreement


1.   Technical requirements, including specification(s), statement(s) of work, drawings, etc.

2.   Responsibilities of both partiesincluding citation of appropriate INCOTERM or Domestic shipping terms.

3.   Prices for all line items, with specific reference to that part of the specification containing the item(s).

4.   Provisions for quantity or term options, with procedures for exercise of such options.  Recommend “prepriced quantity options” if quantity options are used.

5.   Quality and inspection requirements.

6.   Warranty provisions, including “fitness for intended purpose” and “merchantability”, among others.

7.   Procedures for Testing and Acceptance/Rejection.

8.   Payment provisions, including Prompt Payment Discount, if applicable.

9.   Procedures for or Prohibitions against assignment of claims, novation, and subcontracting.

10. Provisions for Termination for Convenience and Cause/Default.

11.  “Force Majeure”/Excusable Delay Provision.

12. Indemnification and/or “Hold Harmless” provisions for intellectual property infringements and claims from third parties.

13. Dispute (Resolution) provisions, including Alternative Dispute Resolution (ADR) procedures.

14. Provisions specific to the type of contract used.  Firm-fixed-price needs few such provisions, while other types will need substantial provisions explaining how the contract type works.  Blanket order or indefinite-delivery type contracts will require several such provisions explaining how “ordering” will take place under the contract.  Incentive contracts will required several provisions explaining how cost, performance, delivery, and other incentives will work.  Cost contracts will require quite a number of implementing provisions.

15. “Notices” and procedures for modification of contract

16. The choice of law and forum.

17. Requirements for “seal”/notarization of the contract by the parties.

** LeRoy H. Graw, EdD, DBA, CPP, CPPM, C.P.M., CPCM, CISCM

 

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