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Clarification on the Use of Purchase Orders and Contract

Clarification on the Use of Purchase Orders and Contract

by Von Ellesse Lanot -
Number of replies: 1

I am seeking clarification regarding the distinction between purchase orders and contracts in procurement projects, specifically:

  1. Under what circumstances is it appropriate to utilize a purchase order in a procurement project? Are there specific types of goods or services or mode of procurement for which a purchase order is more suitable?

  2. At what point does a purchase order evolve into a legally binding contract within the context of government procurement? Are there specific criteria or conditions that trigger this transition?

Any insights or guidance on these matters would be greatly appreciated.

In reply to Von Ellesse Lanot

Re: Clarification on the Use of Purchase Orders and Contract

by Jessie Salvador -

To begin with, Purchase Orders (POs) are contracts by themselves.

  1. POs are used in simple transactions of goods, such as those under alternative methods of procurement. In contracts awarded thru public bidding, there is a Contract Agreement Form that should be used.
  2. Since POs are contracts, the Civil Code of the Philippines apply suppletorily to your question. Contracts are perfected by mere consent. If the offer is definite and the acceptance is absolute, and the object and considerations are present, there is a contract already. The written PO is just to formalize what has been contracted. 

Note: The PO form came from the COA. 

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