purchase orders

A purchase order (PO) is a commercial document and first official offer issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services. It is used to control the purchasing of products and services from external suppliers. Acceptance of a purchase order by a seller forms a contract between the buyer and seller, and no contract exists until the purchase order is accepted. Although a typical Purchase Order may not contain contract language (in fact most contain little more than a list of the goods or services the buyer desires to purchase, along with price, payment terms, and shipping instructions), the Purchase Order is a specially regarded instrument regulated by the Uniform Commercial Code or other similar law which establishes a Purchase Order as a contract by its nature. Yet despite the nature of the Purchase Order as a contract, it is common to accompany the acceptance of a Purchase Order with a legal document such as the Terms & Conditions of Sale, which establish specific or additional legal conditions of the contract. Creating a purchase order is typically the first step of the purchase to pay process in an ERP system.