The Legally Binding Nature of a Purchase Order

As my clients know, we love to talk about the legally binding nature of a Purchase Order. This article highlights the concept, and provides an interesting analogy to our family law practice. For the uninitiated: Po stands for “Purchase Order.” Purchase Orders are used in transactions between businesses. This order is a promise to pay for services or materials. Purchase Orders are legally binding on the parties. In fact, the very first purchase orders were signed by each party – but now they can be delivered electronically, typically via email.

The order itself is a legal agreement. It is a promise to pay, and the invoice must be paid. Period.

A purchase order is a great example of a “legally binding agreement.” It is a basic contract that most everyone has encountered in their life. But if you are a layman, what does it mean to be “legally binding?” Mediation and settlement agreements can mirror this kind of purchase order. If your goal is to have an enforceable divorce settlement agreement, then it is in your best interest to structure your divorce settlement agreement similar to comprehensive purchase order agreements.

A purchase order is sent after a buyer (we’ll say this is you) and seller (we’ll say this is the company selling the service or goods) have reached an agreement on a price and the details of their exchange. The purchase order is the document confirming this agreement.

A Purchase Order is legally binding, but that does not mean that it is unchangeable. It is subject to change, just as divorce settlement agreements are. They can be modified. A legally binding purchase order means that you, as the buyer, must follow through with your purchase.

The easiest way to understand the legally binding nature of a purchase order is to think about a divorce settlement agreement. A PO is akin to a divorce agreement, and clarifies your agreement with your spouse per the terms of support, distribution of assets, and parenting plans. If you want a “legally binding” divorce settlement agreement that cannot be modified four months later when your spouse wants to lower alimony, then you need to document that divorce settlement agreement so that it will be “legally binding.” If the terms are not clear, if the intent of the parties is not clear, then the PO is not binding.

In short, if the agreement is clear, then it is “legally binding.”

The rules governing custody and parenting time are also legally binding. You are still required to comply with the order. Custody agreements are basically plans “for the best interests of the child.” Although the parent’s “best interests” may be conflicting, that does not lessen the importance of following the guidelines set forth in the agreement.

This is the purpose of the legally binding nature of a purchase order. Look at the electronic format used by many companies. They are clearly spelled out in a standardized format with minimal opportunity for misunderstanding.

There are many examples of this in your daily life. Work typically requires clarity. If there is a verbally-agreed contractual relationship, then it is written. This is why business contracts are needed:

That is how – and why – the purchase order is legally binding. Because it takes thought, and is not something that can be changed once implemented.

This is why I encourage my clients to be precise with their settlement agreements. If you do not take care to structure the settlement agreement properly, visitation time with children may be flexible due to “ambiguity.” What that means is that the parties may have reached an understanding during mediation, but that understanding was not made clear in the legally binding agreement.

The extent to which the parties’ understanding is reflected in the agreement matters. If the court can piece together what the understanding was, then the agreement will be upheld.