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Order forms, also known as Scope of Work documents, are essential for suppliers of products or services. Suppliers can use these documents to clearly define the products or services they deliver under a customer contract. They can also help avoid misunderstandings and disputes by setting out the exact nature of the project. However, significant mistakes in order forms can lead to severe consequences, including financial disputes and damage to business relationships. This article explores critical mistakes in contract order forms and why your business should avoid them.
What is a Contract Order Form?
A contract order form is a detailed written document specifying the products or services a supplier will deliver to a customer under a particular written contract. Suppliers typically give this to a customer alongside their terms and conditions, which set out the legal terms to govern their contract. Businesses might refer to this document as a Scope of Work, Contract Details, Services Schedule, or Specification of Services, depending on whether the document is attached to terms or conditions or forms part of a contract.
The primary purpose of a contract order form is to document the key terms of the transaction or order details to which contracting parties have agreed. This document forms part of the contract, ensuring that all commercial terms and specifications are clear and legally binding.
Typical necessary information to include in an order form can be:
- order details, including a complete product or service description detailing what will and will not be part of the scope of work. This is vital so that the contractual obligations of the supplier business are apparent;
- commercial and technical details, such as delivery locations and critical deliverables. This may be a detailed technical specification of the software the supplier will develop in software agreements;
- specific timeframes for delivery, including milestone dates;
- information about charges payable and when payments are due. Order forms can also include payment terms, although sometimes these can be set out in terms and conditions; and
- information about service levels if the parties have agreed upon specific agreed service levels.
Your business should seek legal advice on order forms and how to draft and present them to customers. A commercial lawyer can help your business review your order forms and ensure they are clear and appropriately incorporated into your customer agreements. Their expertise will help ensure your order forms legally bind your customers. Proper incorporation into your business contracts, such as your terms and conditions or business agreements, will help ensure that your order forms are watertight and enforceable.
Critical Mistakes in Order Forms
As a supplier, you should be wary of the following common mistakes in your order form documents:
Unclear Descriptions of Products or Services
Ambiguity in describing your products or services in an order form can lead to customer disputes. For instance, if you are in a dispute with a customer about your promise versus what was delivered.
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Your order form needs to be clear, include detailed descriptions of the products and services, and accurately reflect what you have agreed to with your customer. For example, rather than stating you will deliver ‘PR services’, expressly set out how many hours of PR work your business will provide and what that work will entail—e.g., a certain number of press releases and advisory work.
Your order form needs detailed descriptions to create clarity and avoid potential conflict. It is essential to be precise. Failing to define specific products or services can lead to arguments regarding your scope of work. This can result in ‘scope creep,’ where your customer expects additional work without paying you more. This can lead to disputes and unhappy customers.
Incorrect or Incomplete Costs Information
Order forms determine the costs a customer must pay your business under a contract. Setting the correct purchase price for specific goods or services in an order form is vital. Incorrect or incomplete pricing information can lead to financial arguments and disputes.
This should include your base price, any taxes, additional fees or charges payable by the customer. Transparency in pricing is crucial to maintaining trust and clarity. Failing to specify the fees can lead to significant problems. For instance, if you incur expenses on behalf of a customer project but cannot recover them because you did not expressly set them out in your order form document.
Failure to Attach or Correctly Link Terms and Conditions
Terms and conditions documents generally accompany order forms. Not attaching or linking the relevant terms and conditions to the order form can lead to customer misunderstandings and disputes.
Terms and conditions generally provide the legal framework for the project, including provisions around when the contract starts and ends, how the parties will manage disputes and how your liability as a supplier is limited. You must correctly incorporate your terms to avoid an incomplete and potentially unenforceable agreement. For example, if your order form does not attach a clear copy of your terms and a dispute arises, your customer could argue that they did not agree.
You should attach a copy of the terms and conditions to the order form or clearly provide a link so the customer cannot state that they did not agree to those terms. This will help avoid various potential problems about whether or not a valid contract was entered into between your business and customers.
In summary, an order form is an essential document for suppliers. By avoiding these mistakes, you can help ensure your documents are clear, comprehensive, and legally sound. This reduces the risk of disputes and helps maintain smooth and transparent business operations.
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Key Takeaways
An order form is an essential document for suppliers. However, certain mistakes, such as ambiguity, incomplete pricing information, and failing to attach your terms and conditions, are critical and could be severely damaging. By avoiding these mistakes in order forms, you can help ensure your documents are clear, comprehensive, and legally sound. This will help reduce the risk of disputes and help you to maintain smooth customer relationships.
If you need help drafting a legally sound and correctly drafted order form, contact LegalVision’s experienced contract lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers who can answer your questions and draft and review your documents. Call us today at 0808 196 8584 or visit our membership page.
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