isqa 439/539 legal issues ethics. legal issues in purchasing agency: definition one who is legally...
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Legal Issues in Purchasing Agency: Definition
One who is legally empowered to act for another. An agent has the legal authority to bind his or her
principal to a contract. Duties
Loyalty Obedience Reasonable Care Accounting Information
Actual and Apparent Authority
Legal Issues in PurchasingUniform Commercial Code
49 0f 50 States Section 2: Law of Sales Section 2A: Law of Leases
Key Provisions Definitions Remedies
Contract Formation Offer Acceptance Consideration Competent Parties For Legal Purpose
Sales Authority Battle of the Forms and UCC 2-207 Oral and Written Contracts
UCC 2-201 Now $5,000
Contract Formation Contracts Formed By Any Means That Shows
Agreement 2-204 Firm Offers 2-205
Irrevocable to stated term or max 3 months Acceptance of Offer 2-206
In form required If no requirement, any reasonable manner By performance
Silence CAN NOT CONSTITUTE ACCEPTANCE
Electronic Transactions By Themselves,
Email NOT Satisfactory for “In Writing” Provision EDI Also Not Satisfactory
Verifiable Signature Documents BUT… Buyer and Supplier Can Form Separate
Agreement Recognize Each Other’s
Email EDI Transmittals Other Computer Order Releases (Automated)
Trading Partner Agreements
Acceptance of Goods Right of Inspection 2-513 Acceptance of Goods 2-606
Notification to seller that goods are conforming, or willing to accept in spite of non-conformity
Buyer fails to inspect in reasonable time Revocation of Acceptance 2-608
Supplier fails to cure defects Discovery of latent defects Must occur within reasonable time after discovery
Rejection of Goods Improper Delivery 2-601
Reject the whole, Accept the whole Accept part, reject rest
Rejection 2-602, 3, 4 Reasonable time Notify seller in reasonable time Hold rejected goods with reasonable care
for seller’s disposition
Rejection of GoodsCAN NOT just rework and backcharge
without seller’s concurrenceMust follow reasonable instructions
from seller for dispositionAfter reasonable time, may sell and
recover expensed, returning balance to seller
Battle of the FormsUCC 2-207
Conflicting terms Different, non-conflicting terms Materially altering terms Terms limiting to just those included
Buyer’s Remedies for Breach of Contract
Contract Assignment 2-210 Incidental and Consequential Damages 2-715 Cost to “cover” 2-712 Liquidated Damages 2-718 Anticipatory Repudiation 2-610 Deduction of Damages From Price 2-717
Notify Supplier of Intention to Do So Must be Deduction From Same Contract
Seller’s Remedies for Breach of Contract
If Buyer: Wrongfully Rejects Wrongfully Revokes Acceptance Fails To Pay Repudiates Agreement
In General 2-703 Withhold Delivery Stop Delivery Resell and Recover Damages Recover Damages for Non-Acceptance Cancel
Seller’s Remedies for Breach of Contract
Seller’s Incidental Damages 2-710 Reasonable Charges, Expenses Transportation Care and Custody Return Costs
Warranties Aside From Manufacturer Warranties Express Warranties 2-313 Implied Warranties
Title 2-312 Merchantability 2-314 Fitness for Particular Purpose 2-315
Exclusion or Modification 2-316 Conspicuous Writing As Is, Where Is, With All Faults If Inspection Should Disclose Defects OR If Inspection Is Declined, NO IMPLIED WARRANTY
FOB and INCO TermsOlder Version of UCC
FOB FAS CIF C&F
Latest Edition: All Removed INCO Terms to Apply
UN Convention on Contracts for International Sale of GoodsSimilar Objectives to Uniform
Commercial CodeSimilar to UCC in FunctionFive Significant Differences
UN Convention on Contracts for International Sale of Goods Five Significant Differences
Acceptance of Offer: Mirror Image or No Contract Contract Price: No Contract Without Firm Price Revocation of Offer: May Be Revoked At Any
Time Prior to Acceptance Formation of Contract: At Time of Acceptance Oral Contracts: Valid and Enforceable
CISG May be Preferable to Another Country’s Laws
Foreign Corrupt Practices Act
Illegal to Make Payments Influencing Purchase Decisions
From Lockheed ScandalApplies to ALL Publicly Traded Firms
Even if No International BusinessAccounting for Disposal of All AssetsExempts “Processing Payments”
Sarbanes Oxley Compliance "adequate internal control structures and
procedures for financial reporting." Document Everything
Bids, Awards Purchase Approvals
Assure Compliance With Policies and Procedures Contracts and Corporate Agreements
Assess and Mitigate Risk In Supply Chains In Business Processes
Conclusions Intent is to STAY OUT OF TROUBLEClear, Concise CommunicationFrequent CommunicationCareful Record-keepingUnderstand Rights and Obligations
Under the Law
Unethical Sales Practices Commercial Bribery False Shortages False Price Breaks Market Allocation False Delivery Promises Quotation vs. Invoice False Representation Counterfeit
Unethical Purchasing Practices
Shopping Bids Shopping Ideas Samples Favoritism Payment Terms Contract Quantities Conflict of InterestInternational Ethics Issues
Cultural Issues Reciprocity