What is a purchase order (PO)?
A PO is the buyer's formal offer to buy on stated terms. When it becomes a contract, and what a good one must contain.
A purchase order is issued by the buyer and states what they are buying, at what price, on what terms, for delivery when. It is an offer. It becomes a contract when the seller accepts it — by acknowledging it, or in practice by beginning performance.
What a PO should contain
- PO number and date, referenced on every later document
- Buyer and seller legal entities, with GSTIN for both
- Line items with description, HSN or SAC code, quantity, unit rate and tax
- Delivery address, date, and Incoterms where relevant
- Payment terms — net days, advance, retention
- Reference to any governing agreement, and the acceptance criteria
The "battle of the forms"
A buyer's PO carries the buyer's standard terms. The seller's acknowledgement carries the seller's. Each says its own terms prevail. Which set governs is a genuine legal question, and the usual answer under Indian contract law is that the last set sent before performance began tends to govern — which is why a seller who quietly acknowledges with their own terms often wins the point.
If the terms matter, agree them explicitly instead of relying on whose form arrived last.
What people get wrong
Starting work on a verbal PO. Common, and it is exactly the situation with no agreed terms when something goes wrong.
Not matching PO, delivery note and invoice. Three-way matching is what stops overbilling; it only works if the PO number travels on all three.
Leaving acceptance criteria out. "Delivered" and "accepted" are different events, and payment terms usually run from the second.
On Bidancer
An accepted enquiry or awarded tender is where the PO conversation starts, with the counterparty already verified and the terms of the engagement on record.