Chapter 12 Supply Law and Ethics

McGraw-Hill/Irwin Purchasing and Supply Management, 13/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. The Purchasing Officer May Be Personally Liable Under Certain Conditions When making a false statement concerning authority with intent to deceive or when the misrepresentation has the natural and probable consequence of misleading When agents perform a damaging act without authority -Even though believing they have such authority When performing an act which is itself illegal -Even on authority from the employer When willfully performing an act which results in damage to anyone When performing damaging acts outside the scope of authority -Even though the act is performed with the intention of rendering the employer a valuable service

McGraw-Hill/Irwin Purchasing and Supply Management, 13/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. A Valid Contract Is Based on Four Factors 1.Competent parties - either principals or qualified agents 2.Legal subject matter or purpose 3.An offer and an acceptance 4.Consideration (bargained-for exchange)

McGraw-Hill/Irwin Purchasing and Supply Management, 13/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Purchases Made Orally Normally there must be some written notation if the price of the order for the sale of goods is $500 or more. If the seller supplies a memorandum which is not in accordance with the buyer’s understanding of the oral order, he or she must give a notice of objection to the supplier within 10 days of receipt of the memorandum to preserve his or her legal rights.

McGraw-Hill/Irwin Purchasing and Supply Management, 13/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Four Types of Warranties Express warranty Implied warranty of merchantability Implied warranty of fitness for a particular purpose Warranty of title

McGraw-Hill/Irwin Purchasing and Supply Management, 13/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. The Buyer Has Three Options When Delivery Fails to Conform to the Contract 1.Reject the whole shipment 2.Accept the whole shipment 3.Accept part of the shipment and reject the balance The goods may be late, may be delivered in the wrong quantity, or may fail to meet specifications

McGraw-Hill/Irwin Purchasing and Supply Management, 13/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. E-Commerce and the Law The Uniform Computer Information Transaction Act (UCITA) -Commercial code that would provide uniform rules and standards Uniform Electronic Transactions Act (UETA) -Validates the use of electronic records and electronic signatures The Electronic Commerce Enhancement Act

McGraw-Hill/Irwin Purchasing and Supply Management, 13/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Commercial Arbitration Is your clause in proper form under the appropriate arbitration laws? Does your clause fully express the will of the parties or is it ambiguous? Does your clause ensure the appointment of impartial arbitrators? Does your clause provide for a method of naming arbitrators? -By reference to the rules of an association or otherwise -Safeguarding against deadlocks or defaults in the proceedings