What the quotation commits you to

The invoice that came back short

It is 14 October 2027. RS-812 shipped on time, passed inspection, and Vardo's warehouse in Aarhus received it in two containers. Zaouali invoiced 24,624 sets.

Vardo paid for 24,000.

The cut had run well and the fabric yielded a little better than planned, so Zaouali shipped everything it had made: 2.6% over the ordered quantity. Its quotation, dated 12 March, said this in the standing conditions:

Quantity: plus or minus three per cent at the seller's option, invoiced as shipped.

Vardo's purchase order VR-90118, dated 24 May, said this:

Quantity: 24,000 sets. Over-deliveries will not be paid for.

Two documents, both signed by somebody, saying opposite things about the same number. USD 8,704.80 turns on which one governs.

Whose paper wins

The general answer is unglamorous, and it holds in most legal systems and in the convention that governs many cross-border sales. Where two sets of terms conflict, the terms that govern are usually the last ones sent before the parties performed, and performing without objecting counts as accepting them. In English law this is the reasoning of the Court of Appeal in the Butler Machine Tool case, and something close to it applies far more widely.

Zaouali's quotation went out on 12 March. Vardo's purchase order came back on 24 May with different terms. Zaouali read the price, the quantity and the ship date, saw that all three matched, filed the order, and cut fabric.

Nobody at Zaouali compared the two documents clause by clause. The whole exercise would have taken twenty minutes and produced one email: your order says over-deliveries will not be paid for; our quotation allows a three per cent tolerance at our option, which we need in order to ship a full cut — please confirm which applies. Vardo would almost certainly have confirmed the tolerance, because every one of its other suppliers has one.

That email was never sent. So the last document sent before performance was the purchase order, and the purchase order says Zaouali gave 624 sets away.

The eight lines, priced on one order

After the deduction, Zaouali went back through RS-812 and priced every standing condition that had either saved money or cost it. Eight lines came out.

Total: USD 33,226.72. The order's quoted margin was USD 36,480.00.

So 91.08% of the margin on this order was decided by eight lines. They took about twenty minutes to write, and nobody read them until there was an argument.

Three of the eight went Zaouali's way, because the quotation happened to be clear. Five did not, because it was silent or because the purchase order overrode it. The difference between the two groups is not luck and it is not law. It is whether somebody had written the sentence down before there was a reason to.

What a quotation should actually say

Beyond the price, a quotation needs to answer eight questions. Not thirty. Eight. A page of conditions nobody reads protects nobody.

1. How many. The quantity and the tolerance — the small over or under you are allowed to ship — and at whose option.
2. On what basis. The delivery term and the named place, and which charges at the load port sit on which side of it. Course 8.3 teaches the terms themselves. The quotation's job is to name one precisely.
3. What the price includes and excludes. Testing, certification, inspection fees, freight, duty. Silence is read as included.
4. How long, and against what. The validity period and the inputs the price is based on, with figures. That is lesson 5's clause.
5. From when. The lead time and the event it is counted from. Ninety days from receipt of the purchase order and ninety days from approval of all submits are different promises, and the second is the honest one.
6. How many samples. How many are included, what each further one costs, and who pays the courier.
7. Whose suppliers. Where the buyer nominates a supplier, that the price follows the nominated supplier's quotation.
8. What we assumed. Lesson 1's block. Every fact the enquiry did not give and the quotation had to invent.

The eighth is the one factories leave out, and it is the cheapest of the lot. It costs a merchandiser about eight minutes. It turns an assumption, which is yours and which you lose, into a stated condition of the price, which is the buyer's to accept or correct.

Act as a contracts reviewer working for the buyer, not for me. Here is my quotation, including every standing condition at the foot of the page: [PASTE THE WHOLE QUOTATION]. Here, if I have it, is the buyer's purchase order or order confirmation: [PASTE IT, OR SAY IT HAS NOT ARRIVED YET]. Order facts: quantity [QTY], price [AMOUNT], delivery term and named place [TERM], ship date [DATE], my margin [AMOUNT] a piece. Do four things. First, answer these eight questions from my quotation alone and mark each ANSWERED, PARTLY ANSWERED or SILENT: how many and at whose option is the tolerance; on what delivery basis and which charges at the load port fall on which side; what the price includes and excludes; how long the price stands and against which named inputs; what event the lead time is counted from; how many samples are included and what a further one costs; whose suppliers the price is based on where the buyer nominates one; and which facts the price assumed because the enquiry did not give them. Second, for every SILENT or PARTLY ANSWERED item, tell me what a buyer would be entitled to argue and put a figure on it using my order facts. Third, if I gave you the purchase order, list every clause where the two documents conflict, say which document was sent later, and draft the one email that settles each conflict before anybody cuts fabric. Fourth, give me the total money at stake across all eight, as a figure and as a percentage of my margin on this order. Be adversarial. Do not reassure me.

The document you own

There is one more reason to take this seriously, and it is why this lesson closes the course.

Of every document in the life of an export order, the quotation is the only one written entirely by the factory. The purchase order is the buyer's. The letter of credit is the buyer's bank's. The bill of lading is the carrier's. The inspection report is the inspector's. The technical package is the buyer's, and the customs entry is the broker's. On every one of those the factory's role is to read, comply and object.

The quotation is yours. Every word of it, every condition, every assumption, every number. It is the one moment in the whole order when the factory writes the terms instead of reading them. And most factories spend that moment filling in a price and leaving the rest of the page exactly as it was when somebody typed it in a previous decade.

A quotation is not a form with a price on it. It is the one document in the order where you decide what the deal is.

What to do on Monday

1. Print your standing quotation conditions and read them as though you were the buyer's lawyer looking for a way not to pay.
2. Check the eight questions above. Most quotations answer three or four.
3. Add the assumptions block. It is the cheapest line in this course, and it is the one that turns a guess into a term.
4. Put a step in your order-intake routine: quotation and purchase order side by side, on the clauses that are not the price, before anybody cuts.
5. Where they conflict, send the email the same day. It is a courtesy in May and a claim in October.