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Purchasing Contracts a Practical Guide

  • Book
  • 233 Pages
  • January 2010
  • Spiramus Press
  • ID: 1382194
Purchasing Contracts is intended to be of assistance to those whose work is with contracts for the procurement of goods and services rather than yet another contract law textbook.

This second edition contains additional chapters including one on the special rules governing purchasing by public bodies and utilities.

The subjects of misrepresentation, exemption clauses and electronic contracting are amongst those that have been updated and covered in more detail. The bill currently going through Parliament on bribery is also dealt with.


Graham Fuller's book would be a useful addition to any purchaser s library. It deals in a logical manner with all of the law a buyer is likely to encounter.

- Supply Management magazine

Table of Contents

Tables of authorities. xv

Preface xxi

About the author. xxii

CHAPTER 1: Written contracts and the purchaser

1.1 Oral contractsand those made by conduct

1.2 Some contracts have to be in writing

1.3 Commercial purchase contracts

1.4 The benefits of written contracts

1.5 Written contracts and disputes

1.6 The golden rule in writing a contract

1.7 The consequence of having contracts in writing

CHAPTER 2: Prior commitment

2.1 The need to place sub-contracts before the prime contract

2.2 Working upon a speculative basis

2.3 A sense of security

2.4 Termination for convenience clauses

2.5 Exclusions from the termination for convenience clause

2.6 Limitations of liability for termination

2.7 Partnership

CHAPTER 3: Misrepresentation

3.1 The nature of a misrepresentation

3.2 Rescission

3.3 Bars to rescission

3.4 Damages for misrepresentation

3.5 Different kinds of misrepresentation

3.6 Damages in lieu of rescission

3.7 Summary of remedies for misrepresentation

3.8 Controlling liability for misrepresentation

3.9 Exemption clauses and misrepresentation

3.10 Entire agreement and prior representation clauses

3.11 Effectiveness of prior representations provisions

CHAPTER 4: Formation of written contracts and the battle of the forms

4.1 Different kinds of written contracts

4.2 Standard terms of sale and of purchase

4.3 Let battle commence

4.4 Putting standard terms in other documents

CHAPTER 5: Negotiating the contract

5.1 The golden rule

5.2 Getting ready

5.2.1 What has already been said?

5.2.2 A team leader

5.2.3 Personalities

5.2.4 Solo negotiators

5.2.5 Whose draft?

5.2.6 How tough should the draft be?

5.2.7 Make sure it all goes in the contract

5.2.8 “Parking” a draft clause

5.2.9 Supporting the troops in the front line

5.2.10 Partnership

CHAPTER 6: Simplicity and clarity in contract drafting

6.1 Improving presentation

6.2 20 tips for drafting better contracts

6.2.1 Short paragraphs

6.2.2 Break concepts down by tabulation

6.2.3 The use of different paragraph widths improves the appearance of a contract and makes it reader friendly

6.2.4 Defined terms are useful drafting tools

6.2.5 Certain definitions are unnecessary because of section 61 of the Law of Property Act 1925

6.2.6 There is no need to state the obvious

6.2.7 Here is another bad habit:

6.2.8 Is it better to say:

6.2.9 Be consistent

6.2.10 Try to avoid unnecessary work

6.2.11 If the contract is complex a recital may help

6.2.12 Avoid archaic expressions such as:

6.2.13 Signatures

6.2.14 Try to avoid the following:

6.2.15 Consider singulars and plurals

6.2.16 Anxiety expressions

6.2.17 The use of numerals or words to express numbers

6.2.18 Contracts should be expressed in the active and not the passive voice

6.2.19 Keep any choice of law clause simple

6.2.20 Take particular care with notices clauses

6.3 Words may not always bear their dictionary meaning

6.4 Good drafting wins respect

CHAPTER 7: The specification

7.1 The function of the specification

7.2 The duty to conform is strict

7.3 Purchase managers cannot ignore the specification

7.4 The draftsman’s eight duties

7.4.1 To make it crystal clear to the experts who are responsible for the contract specification that all the purchaser gets for its money is what is set out in the specification

7.4.2 To ensure that the specification is sufficiently definite

7.4.3 To scrutinise closely the specification for gaps

7.4.4 To make sure the specification recognises any peculiarities of the goods and/or services that are being purchased

7.4.5 To see if there are matters contained in the specification which are also covered in other parts of the contract

7.4.6 To consider the special position of specifications for goods which contain references to performance

7.4.7 To be sure that in a contract for services sufficient details of the services are set out in the specification and that it has been made clear to the supplier whether there is anything out of the ordinary

7.4.8 To make sure that the experts have not over-specified the goods or services

7.5 Entire agreement and prior representation clauses

7.6 Conflict and precedence

CHAPTER 8: The Sale of Goods Act 1979

8.1 The history of the Sale of Goods Act and its amendments

8.2 Application

8.3 The function of the SGA

8.4 Formalities

8.5 Price

8.6 Conditions and warranties

8.7 Purchaser’s acceptance of goods

8.8 Title

8.9 Transfer of title and risk

8.10 Performance

8.11 Other matters

CHAPTER 9: The Sale of Goods Act 1979 – description, quality, fitness for purpose and samples

9.1 Correspondence with description

9.2 Quality and fitness

9.3 Liability for quality and fitness only for business sales

9.4 Aspects relating to quality

9.5 Where the condition will not be implied

9.6 Statements may impact on the quality of goods

9.7 Fitness for purpose

9.8 Sales by sample

9.9 Slight breaches of the conditions: restrictions on rejection

9.10 The de minimis principle

9.11 Alternative remedies

CHAPTER 10: The Supply of Goods and Services Act 1982

10.1 A statutory framework for contracts not covered by SGA

10.1.1 Contracts for the transfer of title to goods

10.1.2 Obligation to transfer good title

10.1.3 An obligation that goods will correspond with their description

10.1.4 Quality and fitness

10.1.5 Transfers of goods by reference to sample

10.1.6 Slight breaches of the conditions: restrictions on rejection

10.2 Contracts for the hire of goods

10.2.1 Contracts of hire covered by the SGSA

10.2.2 Bailor must have right to transfer possession

10.2.3 Conditions in hire contracts as to description, quality, fitness and samples

10.2.4 Slight breaches of the conditions: restrictions on rejection

10.3 Contracts for the supply of services

10.3.1 Service contracts to which SGSA applies

10.3.2 Service quality

10.3.3 Acting in the course of a business

10.3.4 The duty to use reasonable care and skill is not classified

10.3.5 The service provider does not have to be the best in the world..

10.3.6 Time for performance

10.3.7 Price of the service

10.4 Excluding the Act

CHAPTER 11: Contracts for services

11.1 Quality

11.2 Service specifications

11.3 Policing service contracts

11.4 Termination rights

11.5 One-off services

11.6 Milestones and periodic reports

11.7 Failure to complete the service

11.8 Late performance

11.9 Subcontracting

11.10 Intellectual property rights

11.11 Fidelity

11.12 Price

11.13 The purchaser’s duty to the supplier

CHAPTER 12: Exemption clauses and the Unfair Contract Terms Act 1977

12.1 Definition of an exemption clause

12.2 The approach of the courts to exemption clauses

12.3 The Unfair Contract Terms Act 1977

12.4 ‘Dealing as consumer’

12.5 UCTA only applies where the defendant has a business liability

12.6 Excluding liability for negligence

12.7 Exemption clauses generally

12.8 Standard terms of business

12.9 Exemption clauses relating to title and similar

12.10 Exemption clauses relating to correspondence of goods with description or sample or as to quality or fitness for purpose

12.11 The requirement of reasonableness

12.12 The onus of proof of reasonableness

12.13 International supply contracts

12.14 Choice of law

12.15 Purchasers seeking to rely on exemption clauses

12.16 The value of UCTA in contract negotiations

12.17 Other restrictions on exemption clauses

CHAPTER 13: Late delivery — no delivery

13.1 Time of delivery or performance

13.2 Where no time is stated

13.2.1 Different legal effects

13.2.2 Termination for delay

13.2.3 Delivery at a reasonable hour

13.2.4 Time being of the essence

13.2.5 Where only part is delivered

13.2.6 Where the contract provides for instalment deliveries

13.2.7 Contracts for services

13.3 Excusable delay

13.3.1 Excusable delay clauses

13.3.2 Qualifying an excusable delay clause

13.4 A promise to try rather than one to commit

13.5 Frustration of contract

CHAPTER 14: Payment

14.1 Advance payments and credits

14.2 The purchaser who fails or refuses to pay

14.3 Liens

14.4 Reservation of title

14.5 Method of payment

14.6 Interest on late payments

14.6.1 Commercial attitudes

14.6.2 The scheme of the Act

14.6.3 Interest on advance payments

14.6.4 Excluding the Act

14.6.5 Avoiding statutory interest by long credit periods

14.6.6 Calculating the amount of statutory interest

14.6.7 Fixed sums in addition

CHAPTER 15: Assignment and subcontracting

15.1 Assignment

15.1.1 The history

15.2 Section 136 Law of Property Act 1925

15.2.1 Equitable assignment

15.2.2 Inability to assign due to identity

15.3 Subcontracting

15.3.1 A general right to subcontract

15.3.2 Inability to subcontract due to identity

CHAPTER 16: Amendment and Novation

16.1 Contract amendment

16.1.1 The nature of a contract amendment

16.1.2 Amendments and the need for consideration

16.1.3 Oral agreements to written contracts

16.1.4 Amendment clauses

16.2 Novation

16.2.1 Novation agreements

16.2.2 Novation by conduct

CHAPTER 17: Privity of contract and the Contracts (Rights of Third Parties) Act 1999

17.1 The doctrine of privity

17.2 Rights and duties

17.3 Exceptions to privity

17.4 Agency as a means of avoiding privity

17.5 The Contracts (Rights of Third Parties) Act 1999

17.6 Crystallisation of third party rights

17.7 Third party is subject to the same defences and rights

17.8 Third parties relying on exemption clauses

17.9 Excluding the provisions of the Act

CHAPTER 18: Damages for breach of contract

18.1 Damages in addition to or in place of termination

18.2 The object of damages

18.3 No loss no damages

18.4 Nominal damages

18.5 Remoteness of damage

18.6 Exceptional losses of profit

18.7 Exemption clauses

18.8 Mitigation

18.9 Heads of damage

18.10 Damages for annoyance and distress

18.11 Liquidated damages

CHAPTER 19: Other Remedies for Breach of Contract

19.1 Specific performance

19.2 Injunctions

19.3 Interim and ex parte injunctions

19.4 Damages in lieu of an injunction

19.5 Action for an account

19.6 Modern injunctive remedies

19.6.1 Mareva injunction (“freezing order”)

19.6.2 Anton Piller order

19.7 Rectification

19.8 Remedies of an unpaid seller of goods

CHAPTER 20: Dispute Resolution and limitation of actions

20.1 Discussion

20.2 When talks break down

20.3 They’re not getting away with it

20.4 Arbitration

20.5 Litigation

20.6 Civil Procedure rules and protocols

20.7 The advantages of arbitration

20.8 Disadvantages of arbitration

20.9 Advantages of litigation

20.10 Adjudication

20.11 Mediation and conciliation

20.12 Limitation of actions

CHAPTER 21: Intellectual property rights

21.1 The nature of IPR

21.2 The owner of IPR

21.3 Patents

21.4 Copyright

21.5 Database right

21.6 Designs

21.6.1 UK registered design

21.6.2 EU registered design

21.6.3 Transitional Provisions

21.6.4 Unregistered design right

21.6.5 Unregistered design right in the UK

21.6.6 Unregistered design right in the EU

21.7 Trade marks

21.8 Restrictions on passing off

21.9 A purchaser’s rights in a supplier’s IPR

CHAPTER 22: Confidential information

22.1 The nature of confidential information

22.2 Different kinds of confidentiality

22.3 Trade secrets

22.4 Information needing express protection

22.5 General know-how

22.6 The purchaser and confidential information

CHAPTER 23: Electronic commerce

23.1 Purpose of this chapter

23.2 Definition of e-commerce

23.3 Misconceptions concerning e-commerce

23.4 Offers, acceptances and invitations to treat

23.5 Whose terms apply?

23.6 What happened to Argos

23.7 Framework agreements

23.8 Other considerations

23.9 Electronic Communications Act 2000

23.10 Regulation of Investigatory Powers Act 2000

23.11 Consumer Protection (Distance Selling) Regulations 2000

23.12 Electronic Commerce (EC Directive) Regulations 2002

23.13 Provisions of the Electronic Commerce Regulations

CHAPTER 24: Purchasing by Public Bodies and Utilities

24.1 The directives

24.2 Incorporation of the directives into the laws of the UK

24.3 The Public Contracts Regulations

24.3.1 Application

24.3.2 The need to advertise

24.3.3 The extent of the need to comply

24.3.4 Different procurement procedures

24.3.5 Choice of procedure

24.3.6 Minimum Timescales

24.3.7 Excluded procurements

24.3.8 Standstill periods

24.3.9 Framework agreements

24.3.10 Ineligibility for award

24.3.11 Basis for contract award

24.4 The Utilities Contracts Regulations (“UCR”)

24.4.1 A more relaxed regime

24.4.2 Thresholds

24.5 The New Remedies Directive

CHAPTER 25: Purchasing abroad

25.1 Choice of law

25.2 International contract law

25.3 Choice of jurisdiction

25.4 International arbitration

25.5 Delivery

25.6 Export licences

25.7 Payment

25.8 Legal personality

25.9 Language

CHAPTER 26: Ethics in purchasing

26.1 Duties of an employee as the employer’s agent

26.1.1 Secret profits

26.1.2 Safeguarding property

26.1.3 Conflicts of interest

26.1.4 Diligence

26.2 Criminal liability

26.3 New laws

26.4 Corruption and codes of conduct

26.5 An anti-corruption culture

26.6 The whistleblowers’ charter

APPENDIX 1: Selected cases from the law of contract

APPENDIX 2: Damages – betterment or compensation?

APPENDIX 3: Parking on the pavement

APPENDIX 4: Regus – a case study





Graham Fuller is a visiting lecturer on procurement law and other subjects at the WMG an academic multi-disciplinary unit at the University of Warwick; and a regular presenter at conferences for the Institute of Purchasing and Supply.

As a graduate in law he was called to the bar and practised for seven years until he became Senior Crown Counsel to the Hong Kong Government. He later became Senior Legal Adviser to Rolls-Royce plc, advising on matters including international joint ventures, technology transfers and purchase contracts.