As a result, the terms and conditions of a betaCo standalone po order may need to be significantly shortened and made less unilateral in order to reduce BetaCo and Acme`s transaction costs. I can understand that the same terms and conditions apply to purchases under a master`s contract and to purchases under separate orders: your concerns as buyers are the same in both contexts. This is of great interest to me, as our legal department has prepared a new set of terms and conditions for our stand-alone PO, which essentially reflects the terms and conditions of our master type contract. This means that the new general concepts are global and one-sided in our favour. It is also three times longer than the general terms we currently use for standalone POs. I am torn between the desire to protect our business by using a comprehensive set of terms and conditions for all our transactions and the desire to use a shorter set of terms and conditions to accelerate our standalone PO operations, most of which are low risk. I`d like to hear what you think. If you have a master`s contract, the terms and conditions – that is, anything that does not relate to specific business such as product and price – are included in the contract; orders placed under the contract contain only the terms of the contract. In addition, the terms and conditions are negotiated in a basic contract. On the other hand, if you buy something with a stand-alone order, the terms and conditions are included in the order and these terms and conditions are defined unilaterally by the buyer and are not negotiated. But you have to take into account the transaction fees.
With a master`s contract, the parties decided that they would do enough business together to justify in advance the transaction costs associated with negotiating a master`s contract. On the other hand, you are dealing with an independent order with a single transaction – it probably would not bear the same transaction costs. Of course, BetaCo`s transaction costs could be significantly reduced in the next transaction by Acme. This assumes, however, that the same BetaCo staff make the second order as the first. And more than that, when handling the first order, it would be risky for BetaCo to assume that it would be able to make its transaction costs profitable during future purchases: for all that it knows, Acme`s first order could be the last. In contrast, Acme and BetaCo choose to have BetaCo Acme purchase widgets with standalone POs. Acme orders 1,000 widgets for $10,000, using an order that contains the same terms and conditions as those used in the master`s contract with AlphaCo. The order placed at BetaCo is worth 1% of the expected value of purchases under the master contract with AlphaCo. That is why I understand the idea that, for independent orders, it makes sense to reduce a number of general concepts used in a master`s contract and make them less unilateral, although they reflect legitimate concerns.