ITPEC IP October 2023 Question 75
Company S purchases equipment from Company K by using the procedure shown in the diagram below. In this transaction procedure, which of the following is the point where the sales contract is concluded? Here, once the quotation is provided, the content of the transaction does not change throughout the procedure.
Explanation
B, the order acknowledgement — the contract is concluded when the supplier accepts the purchaser's order.
A contract is formed when an offer is met by an acceptance on the same terms. Following the documents in time order:
- •RFQ — S asks K for a quotation, an invitation to trade
- •Quotation — K presents the terms
- •Order form (A) — S offers to buy on those terms
- •Order acknowledgement (B) — K accepts the order; offer and acceptance now match, so the sales contract is concluded
- •Delivery/Invoice (C), Receipt (D), Bill, Payment — the parties perform the contract
Since the content does not change after the quotation, nothing after B alters the agreement.
Answer (b)
Why not others:
- •(a) — the order form is only the purchaser's offer; K has not yet accepted it
- •(c) — delivering the goods with an invoice is the supplier performing a contract that already exists
- •(d) — the receipt confirms that the purchaser received the goods; it is also performance, not formation
Key rule: Offer plus acceptance makes a contract: in a purchasing flow the order is the offer and the order acknowledgement the acceptance, while delivery, receipt and payment carry it out.
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