Question at position 17 A purchase order is legally binding once issued by the buyer.TrueFalse

Question

BlackTom AI · Accepted Answer

The question asks whether a purchase order becomes legally binding once issued by the buyer. 
Option 1: True. The reasoning here is that a purchase order is an offer from the buyer to purchase goods or services under specified terms. When the seller accepts the PO, or when the PO is otherwise conclusively acted upon (e.g., shipping goods, invoicing per the PO terms), a binding contract typically arises. Therefore, the act of issuing the PO is a pivotal step toward creating a contract, and under many procurement and contract frameworks, it can be considered binding once the seller accepts or acknowledges it.
Option 2: False. This would be the intuitive choice if one assumes that only a seller’s signature creates binding effect. However, the more precise view in standard purchasing practice is that the PO is an offer from the buyer, and binding obligation typically arises upon acceptance by the seller and performance under the PO, not merely at the moment of issuing. Misunderstanding here often stems from conflating offer and acceptance.
Option 3: (Not present in this two-option setup, but if considered) An alternative misconception would be that POs are binding regardless of acceptance, which ignores the fundamental contract principle that an offer requires acceptance to form an agreement. This would be misleading in most commercial contexts.
Option 4: (Not present in this two-option setup, but another potential wrong path) Some might think POs are only binding if they include a signature; in practice, electronic and implied-acceptance mechanisms can still create a binding contract without a traditional inked signature, depending on governing law and terms.
Overall, the statement aligns with the common interpretation that a purchase order functions as an offer that becomes binding upon seller acceptance or performance under the PO terms, which supports the True option as correct in this item.

Question at position 17 A purchase order is legally binding once issued by the buyer.TrueFalse

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