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Vocabulary of Contracts: Verträge

Acceptance of offer
The unconditional acceptance of an offer forms the contract. It may be either oral, in writing or implied from conduct. Where the means of communication is instantaneous (ie face-to-face, telephone, fax or email) the contract will come into being when and where the acceptance is received. If it is posted it is deemed effective from the time of posting.

Advice notes/goods received notes
A supplier advising that a consignment of contracted goods has been dispatched issues a goods advice note. A goods received note (GRN) is issued by the buyer to acknowledge delivery but not necessarily acceptance of a consignment. (See note on Acceptance of goods and services)

Agreement
A generic term for a legally-binding undertaking between the buyer and supplier, in terms of the obligations, relationships and responsibilities between them, that is commonly described as a contract. In it simplest form, an agreement can be verbal. The more usual approach is to make it in writing, using either a standard document (see purchase order) or a specifically prepared document (often described as a contract). Once an agreement has been made there is a commitment.

Approved list
Also known as a trade list, eligible list or select list of potential suppliers. See supplier appraisal.

Approved Supplier
See supplier appraisal.

Arbitration
The nomination of an independent person or body within a contract to solve disputes is a more economic and quicker mechanism than the law courts and one that tends to attract less publicity. Arbitration is common in works contracts.

Assignment/novation
In law one party cannot unilaterally transfer or assign any if its liabilities or obligations under a contract but it may be able to assign its rights or some of them. One party can assign its liabilities and obligations to a third party but only if there is a trilateral agreement between the parties concerned. Such an agreement is called ’novation‘. (not applicable in Scotland)

Banker’s guarantee
Some suppliers offer, or are required by the buyer, to provide at their own expense a promise from their bankers to underwrite any debt, default or failure of the supplier to perform its contractual obligations.

Bid
May also be known as a tender, quote or quotation: a supplier’s offer to provide goods or services for consideration, in response to the buyer’s inquiry or invitation to quote/tender.

Bid appraisal
May also be known as bid (or tender) analysis, evaluation or assessment. The formal process of looking at suppliers‘ bids to identify which provides the best value for money. It may use various scoring techniques such as whole life costing to set out the components of the bids and compare them on a like-for-like basis. The outcome can be a ranking of the bids and a summary report that will assist the decision-making process.

Bid conditioning
A process whereby suppliers‘ bids are scrutinized for conformity with the inquiry documents. Errors and omissions are rectified and other points clarified, so that like-for-like evaluation of the bids can be made. This process should be distinguished from post tender negotiation.

Bill of material
A list of materials, parts, components or sub-assemblies which comprise a product.

Bill of lading
Someone who wishes to move goods by sea can make a contract to have the goods carried on another person’s ship. The bill of lading itself is a receipt to show the goods have been put on board, evidence of the terms of carriage and a document of title which can be used to transfer possession even if the goods are physically at sea.