China sourcing glossary
What Is a Purchase Order (PO)? When Does It Bind a Chinese Supplier?
What is a purchase order?
A PO is the buyer's own document. It usually lists item numbers, quantity, unit price, delivery date, trade term and shipping details. Many buyers also attach their standard purchase terms.
A PO can do two jobs. It can accept a supplier's quotation or proforma invoice. Or it can be your offer, which the supplier then accepts or answers with changes. Under a master supply agreement, each PO is usually an order, and the agreement should say how a PO is placed and accepted.
For a first production run, a PO alone rarely covers inspection, tooling or disputes. I answer whether a purchase order is enough on the manufacturing agreement page.
When does a PO bind a Chinese supplier?
When the supplier accepts it. A PO is an offer if it is specific and shows that you will be bound once the supplier says yes (Civil Code art. 472). The supplier normally accepts by notice, such as a signed copy or an email confirming the order. It can also accept by conduct, if your past dealings or the PO itself allow that (art. 480). And if the supplier starts production or ships, and you take the goods, a contract can exist without any signature (art. 490). Silence counts as acceptance only where the law, an agreement or your past dealings say so (art. 140).
Whose terms apply when the supplier's confirmation differs from your PO?
Neither side's terms win automatically. A reply that changes the goods, quantity, quality, price, delivery, liability or dispute terms is a new offer (art. 488). A minor change becomes part of the contract unless you object promptly (art. 489). So a sales confirmation with a different acceptance clause doesn't simply accept your PO. Nor does a document win because it was sent last.
The answer turns on the law that governs the contract, what the two sides wrote, and what each side did next. For an international sale, check whether the CISG (the UN convention on international sales) applies. Look at three points, and keep each document with its attachments and version:
- The PO you sent. Which terms, annexes and versions did it include?
- What came back. A signed copy of your PO, the supplier's own confirmation, or your PO with lines added or struck out?
- What happened next. Did you pay or let production start after the supplier's version arrived?
These examples are based on matters I have handled. Names, products, places, dates, amounts and other identifying details have been removed or changed. They show the kind of work involved. They don't promise any result.
Acting for a buyer
PO and sales confirmation with different acceptance terms
I reviewed a set of order documents where the buyer's PO and the seller's confirmation set different acceptance terms, and each side thought its own version applied. The PO, the seller's signed copy and the later emails all said "confirmed", but each confirmed something different. I set the delivery, acceptance, claims and dispute terms side by side, so the client could decide which to hold and which to trade. The seller accepted the quality standard but wanted acceptance to be complete once goods left the factory. So I wrote separate terms for the visual sampling check, the signed quantity count and defects found after arrival. A signed supplementary confirmation listed the old clauses it replaced, and production started on the version both sides had accepted.
How do you settle conflicting terms before production?
List each conflict, decide it, and record the result in a supplementary confirmation that both sides sign. Name the clauses it replaces. The parties can change a contract by agreement (art. 543), but a change whose content is unclear is presumed not to have been made (art. 544). A line saying "both parties reconfirm the order" leaves each side relying on its own version.
An illustrative conflict list:
| Term | Your PO | Supplier's confirmation | Agreed wording |
|---|---|---|---|
| Acceptance | After inspection at destination | Final when goods leave the factory | Sampling check before shipment; quantity signed for on arrival; later defects notified within [ ] days |
| Delivery | Arrives by [date] | Ships about [ ] days after deposit | Ships by [date], FOB [port], Incoterms 2020 |
| Disputes | Buyer's home courts | Court where the seller is based | [One forum, chosen with the seller's assets in mind] |
The confirmation itself can be short:
Supplementary confirmation to PO No. [ ] and Sales Confirmation No. [ ]. The terms below replace clauses [ ] of the PO and clauses [ ] of the Sales Confirmation. The replaced clauses no longer apply. If any earlier document conflicts with this confirmation, this confirmation prevails.
Questions from overseas buyers
Does the supplier's signature on my PO mean it accepted all my terms?
Usually it accepts what the signed copy contains. Check what came back. A supplier may add a line, strike out a clause or attach its own terms, and any of those can turn the signed copy into a new offer (art. 488).
Can I change a PO after the supplier has confirmed it?
Only by agreement (art. 543). Send the change in writing, name the PO and the clause, and get the supplier's written yes before production depends on it. A change that was never clearly agreed is treated as not made (art. 544).
I review order documents and supplier contracts for overseas buyers →
Sources and translations
- Civil Code of the PRC (2020), arts. 140, 472, 480, 488, 489, 490, 543 and 544.
Translations are mine and unofficial.
Official texts cited in this article.
- Civil Code of the PRC (2020) npc.gov.cn
- UN Convention on Contracts for the International Sale of Goods (CISG, 1980) uncitral.un.org
Have a China-side question?
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