Distribution Management
Chapter 3: The Legal Aspects of Purchasing A need is requested by a specific department and the purchasing person satisfies the need. The potential source is evaluated in terms of quality, price, and delivery performance. The purchasing manager makes the purchase and the treasurer of the company sends the check after an invoice is received.
However, the seller must know that the decision maker has given the purchasing manager the authority to make the purchase. This transaction is legally binding through the agency concept. An agency relationship requires at least three parties. The first party is the principal, the one with the need. The second party is the agent, who represents the principal. The third party is the one with which the agent conducts business on behalf of the principal.
The purchasing manager is an agent for the firm. The terms purchasing manager, buyer, and purchasing agent will be used interchangeably. The purchasing manager administers the purchasing function. The purchasing function consists of many tasks within the business entity, including supporting the company with the required (1) materials, (2) supplies, and (3) services.
The most important task that the purchasing officer is involved in is representing the principal in the development and negotiation of contracts with third parties. The title purchasing agent is a generic legal term. Recently, the term has been superseded by vice president of purchasing, vice president of materials management, and vice president of supply management. From a legal standpoint, the term purchasing agent accurately defines the individual who deals with a third party for a principal.
The selection of the senior purchasing manager is an important recruitment effort since the person will “inherit” the principal-agent relationship for all the expenditures and commitments of the company made by the purchasing agents. From a legal point of view, the following factors are associated with the appointment:
However, the seller must know that the decision maker has given the purchasing manager the authority to make the purchase. This transaction is legally binding through the agency concept. An agency relationship requires at least three parties. The first party is the principal, the one with the need. The second party is the agent, who represents the principal. The third party is the one with which the agent conducts business on behalf of the principal.
The purchasing manager is an agent for the firm. The terms purchasing manager, buyer, and purchasing agent will be used interchangeably. The purchasing manager administers the purchasing function. The purchasing function consists of many tasks within the business entity, including supporting the company with the required (1) materials, (2) supplies, and (3) services.
The most important task that the purchasing officer is involved in is representing the principal in the development and negotiation of contracts with third parties. The title purchasing agent is a generic legal term. Recently, the term has been superseded by vice president of purchasing, vice president of materials management, and vice president of supply management. From a legal standpoint, the term purchasing agent accurately defines the individual who deals with a third party for a principal.
The selection of the senior purchasing manager is an important recruitment effort since the person will “inherit” the principal-agent relationship for all the expenditures and commitments of the company made by the purchasing agents. From a legal point of view, the following factors are associated with the appointment: