Tuesday, October 18, 2011

Do you read supplier’s specifications or datasheets?

Many buyer’s may purchase an item in accordance with the Supplier’s specifications that their engineer or customer say that the product meets their needs? The question is do procurement people read the supplier specifications? Do the customers or engineers that want the product
ever read and understand anything that’s may me in those documents other than the specific technical specifications? If they do, do they understand what everything means? If you are using the supplier specifications to define what you are purchasing you better read them.

Many times the supplier specifications are made part of the buyer’s agreement with the supplier as it’s a fast and easy way to define what is being purchased. The problem is that when you make those part of your agreement they could contain terms that restrict or limit the product’s use, they could also add terms that add to or conflict with the agreement and change your rights or liabilities under the agreement. Some suppliers will include those terms in the very beginning of the specification where they will be quickly or easily found, but I’ve also seen a large share hidden in the very back of the specification, sometimes in much smaller print.Many of those terms are not favorable for the Buyer.

To avoid that happening to you the first thing you need to do is read the specification to see exactly what the specification contains. Having an order of precedence clause in your agreement may not help you for two reasons. First you need to understand what precedence that specification would have. If the specification is made part of a document that has higher precedence than a master agreement, that specification would have priority over the master agreement. More important, order of precedence only comes into play when there is a conflict between the two documents. If terms included in the specification don’t conflict with what’s included in your agreement or other document, it’s now part of the agreement as written.

I did a sampling of supplier specifications and data sheets and here are some of the concepts I found in a number of them:

“SUPPLIER makes no representation or warranty as to the accuracy of such information.”
What they are saying is if any of the information is wrong and you have a problem it’s your problem.

“Supplier reserves the right to make modifications, enhancements, improvements, and other changes to its products at any time and to discontinue any product or service without notice.”
What they are saying here is we don’t care if our product works in your application or not and we don’t care about continuity of supply for your supply chain.

“All products are sold subject to SUPPLIER’s terms and conditions of sale supplied at the time of order acknowledgment.”
What they are saying here is we want to keep changing the terms and we want the sale to also be based on our terms.”

“SUPPLIER warrants performance of its products to the specifications applicable at the time of sale in accordance with SUPPLIER’s standard warranty.”
So they can change what the warranty is..
Do they even disclose what the standard warranty is?

“SUPPLIER products are not authorized for use in safety-critical applications (such as life support) where a failure of the SUPPLIER product would reasonably be expected to cause severe personal injury or death, unless officers of the parties have executed an agreement specifically governing such use.“
I’ll talk about this one in a separate post about high-risk use.

“Buyer must fully indemnify SUPPLIER and its representatives against any damages arising out of the use of SUPPLIER products in such safety-critical applications”.
Here they want indemnification based upon just use in that application. It makes no difference whether the Buyer had any knowledge of such use or sold a product intended for such use. I’ll talk about this one in a separate post about high-risk use.

It’s amazing the things you can learn when you actually read a supplier’s specification or datasheet.If you have suppliers that have these types of terms in their specifications or data sheets you need to exclude those terms from the incorporation by reference into your agreement.

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