A blanket purchase order is an agreement where you commit to buying a minimum quantity of goods or services over a set period, often at fixed prices. This matters legally because once you sign it, you're legally bound to buy those quantities—you can't simply change your mind or walk away without potential liability for breach of contract. The key principle is "consideration": both sides must give something of value, and here you're giving a guaranteed commitment in exchange for (usually) better pricing. For example, if you sign a blanket PO for 1,000 widgets per month for 12 months, you legally owe payment for those widgets even if your business needs drop. This is high-risk because it locks you into spending money regardless of actual demand.
Before signing, carefully forecast your genuine needs for the full contract period—don't rely on optimistic projections. Negotiate an "out clause" that lets you reduce quantities if your business circumstances change materially, or at minimum, try to limit the commitment to shorter periods (e.g., 6 months renewable) so you can reassess. ---
Frequently Asked Questions
What does this clause mean in simple terms?
A blanket purchase order is an agreement where you commit to buying a minimum quantity of goods or services over a set period, often at fixed prices.
Why should I care about this clause?
This matters legally because once you sign it, you're legally bound to buy those quantities—you can't simply change your mind or walk away without potential liability for breach of contract.
What are my options?
The key principle is "consideration": both sides must give something of value, and here you're giving a guaranteed commitment in exchange for (usually) better pricing.
How does this affect small businesses?
For example, if you sign a blanket PO for 1,000 widgets per month for 12 months, you legally owe payment for those widgets even if your business needs drop.