Purchase Order and Terms of Sale Review Checklist: A Practical Checklist

Summary. Most companies have a purchase order form and an acknowledgment form drafted years ago by someone no longer there, never read against each other, and contradicting each other on every term that matters. Under UCC § 2-207 the usual result is that conflicting terms cancel and the Code's defaults apply — which for a seller means full implied warranties and uncapped consequential damages. This checklist is a form audit: each document's role in formation, the terms that must be present and how each must be drafted to survive, the process controls that decide who wins a form fight, and the master agreement approach that avoids the problem above a threshold.

What this checklist is for. Auditing and drafting standard purchase and sale forms. For the doctrine, see The Battle of the Forms Under UCC Section 2-207.

Phase 1 — Inventory every document in the order flow

List every document your company sends or receives in a transaction: web quote, PDF quotation, proposal, purchase order, ERP-generated order confirmation, acknowledgment, invoice, packing slip, bill of lading, installation acceptance form, and any portal click-through.
For each, identify who generates it, when, and what terms it carries.
Identify documents generated automatically by a system — these are frequently configured with terms nobody has reviewed since implementation.
Locate the actual current version of each form, and note when it was last reviewed by counsel.
Determine each document's intended role in formation: invitation, offer, acceptance, confirmation, or post-formation administration.

Why this matters. Section 2-207 disputes are decided on sequence, and a company that cannot say which of its documents is the offer cannot predict the outcome.

Phase 2 — Check the role each document plays

A quotation is usually not an offer unless it is definite and uses language of commitment. If you are the seller and want the quotation to be the offer, include quantity, price, delivery, and an express commitment to sell.
A purchase order is usually the offer, which gives the buyer the ability to invoke the exception in UCC § 2-207(2)(a) by expressly limiting acceptance to its own terms.
An acknowledgment is usually the acceptance. Confirm it does not accidentally read as a counteroffer, and confirm any "expressly conditional" language is deliberate.
An invoice is usually post-formation and its terms usually do not become part of the contract. Do not rely on invoice terms.
Confirm no two of your documents state contradictory terms.

Phase 3 — Buyer-side purchase order terms

Acceptance expressly limited to the terms of the order, with additional or different terms rejected — the § 2-207(2)(a) lever, and it is free.
Quantity, price, delivery date, and delivery location, with any tolerance stated.
Specifications and acceptance criteria, and a defined inspection and rejection period.
Warranties required — conformity to specification, merchantability, fitness for the stated purpose, title, non-infringement — with a warranty period and a remedy.
Remedies preserved, including the right to cover and to recover consequential damages.
Indemnification for third-party claims, including infringement and product liability.
Insurance requirements with additional insured status by endorsement, primary and non-contributory, and certificates required before shipment.
Title and risk of loss, and the Incoterms rule if international, by year.
Change and cancellation rights, with the cancellation charge defined.
Packaging, labeling, documentation, and country of origin requirements.
Compliance — regulatory, export control, sanctions, forced labor, conflict minerals, and any customer-specific code.
Confidentiality and ownership of tooling and intellectual property.
Audit and inspection rights at the supplier's facility.
Set-off rights across orders.
Governing law, forum, and jury waiver.
Assignment restrictions and a prohibition on subcontracting without consent.

Phase 4 — Seller-side terms of sale

Warranty, limited and clearly stated, with the duration and the exclusive remedy.
Disclaimer of implied warranties complying with UCC § 2-316: the merchantability disclaimer must mention merchantability and, if written, be conspicuous; the fitness disclaimer must be in writing and conspicuous. Use bold or capitals and place it where it will be seen.
Limitation of remedy under UCC § 2-719, with an express statement that it is exclusive, and a fallback in case the exclusive remedy is held to fail of its essential purpose.
Exclusion of consequential and incidental damages, stated separately from the remedy limitation so that failure of one does not carry the other.
Aggregate liability cap, expressed as a formula tied to the price.
Price and price adjustment, including any escalation tied to a published index and any surcharge mechanism.
Payment terms, interest on late payment, and suspension rights for non-payment.
Delivery terms, risk of loss, and title, including whether title passes at shipment.
Force majeure, with enumerated events including pandemic, government action, supplier failure, and transportation unavailability, an express catch-all, a stated causation standard, a mitigation obligation, allocation authority among customers, and termination rights on prolonged events.
Allocation language consistent with UCC § 2-615(b).
Inspection, acceptance, and the period for claims, with a defined and reasonable claim window.
Return and restocking policy.
Security interest in goods sold on credit, with authorization to file a financing statement.
Indemnification, scoped to what the seller can actually bear.
Compliance, export control, and end-use restrictions.
Governing law, forum, jury waiver, and any arbitration clause — recognizing that arbitration is frequently held to materially alter and therefore not to survive a form fight.
Entire agreement and no-modification-except-in-writing provisions.

Phase 5 — Run the collision test

Line up the ten terms that matter — warranty, remedy limits, consequential damages, indemnity, insurance, title and risk of loss, dispute resolution, governing law, payment and interest, and termination — and mark, for each, what your form says and what your five largest counterparties' forms say.
For each conflict, apply the knockout rule (the majority approach) and record the Code default that would apply.
Note which of your protections would be lost in a form fight. For sellers, expect to lose the warranty disclaimer, the damages exclusion, and the liability cap.
Identify which terms are additional rather than different, and assess whether each would materially alter under § 2-207(2)(b).
Consider whether trade usage and course of dealing support any of your terms — a term the parties have used repeatedly is much less likely to produce "surprise."

Phase 6 — Process controls

Assign responsibility for objecting in writing to counterparty forms, with a template letter and a five-day service level. Both the (a) and (c) exceptions in § 2-207(2) reward the party that reads the other side's form.
Configure the ERP system to attach the current terms, and verify the attachment quarterly.
Set a dollar or risk threshold above which a signed master agreement is required, and enforce it.
Train sales and purchasing that "we'll just send our acknowledgment" is not a substitute for an agreement.
Retain order documents and their metadata for at least the four-year period of UCC § 2-725 plus a margin, including system-generated confirmations stored outside the mail system.
For international sales, decide about the CISG and, if you want the UCC, opt out expressly — a choice-of-law clause selecting a U.S. state does not opt out.

Phase 7 — The master agreement

Negotiate a master purchase or supply agreement with every significant counterparty.
Include an express provision that the master agreement governs and that any additional or different terms in any purchase order, acknowledgment, invoice, or other form are void and of no effect, whenever sent and whether or not objected to.
Make releases and purchase orders ordering documents only — quantity, price, and delivery.
Address the terms the forms fight about, once, in a negotiated document.

Common mistakes

Relying on an "expressly conditional" clause as a seller, which usually produces a contract under § 2-207(3) governed by the Code's buyer-friendly defaults.
A warranty disclaimer that is not conspicuous and does not mention merchantability.
A remedy limitation with no fallback if the exclusive remedy fails of its essential purpose.
Invoice terms relied on as contract terms.
Never objecting to the counterparty's form, forfeiting both § 2-207(2) exceptions.
Inconsistent terms across the company's own documents.
An arbitration clause assumed to be in the contract when it likely materially alters.
No opt-out from the CISG in international sales.
Order emails purged on a short retention schedule, so sequence cannot be proved.
No threshold above which a signed agreement is required, so a seven-figure order proceeds on forms.

Primary authority

UCC § 2-204 (formation); § 2-206 (acceptance); § 2-207 (additional terms); § 2-201 (statute of frauds and merchant confirmation); § 2-314 and § 2-315 (implied warranties); § 2-316 (disclaimer); § 2-615 (excuse and allocation); § 2-719 (remedy limitation); § 2-725 (limitations).
CISG Article 19 for international sales.

This checklist is educational and not legal advice. States differ on the treatment of different terms and on whether particular clauses materially alter, and international sales may be governed by the CISG. Consult qualified commercial counsel before relying on standard-form terms.