Are Purchase Orders considered contracts

Are Purchase Orders considered contracts? I see reference in some material ( Rita, Crosswind ) that they are but this is not listed in the PMBOK. I also have heard that they should not be considered a contract type.

The PMP Guru's picture

It's a pretty good question.

well, it may not be explicitly mentioned in the PMBOK but logically it's a contract.

First of all you need to see what a PO is:

There could be a thousand definition and explanation but let's look at this simple one and deduct for ourself that it's a contract or not.

Purchase order (PO):  is a commercial document issued by a buyer to a seller , indicating types, quantities, and agreed prices for products or services the seller will provide to the buyer.

If both parties are on agreement on something, So I beleive that it makes a legal binding contract between both the parties.

Kind regards,

The PMP Guru

I would like to put this to you as simply as possible, -- EVERY PURCHASE ORDER  IS ACTUALLY A CONTRACT. Please do note, any mistakes in this understanding can hamper your position as Project Manager. Please believe me, I have faced this in reality in the past. When a purchase order is totally fulfilled but the payment is already done, if you are the project manager -- THIS CAN MEAN HELL FOR YOU!!!!

What we do on the project as Project Manager is actually never overseen by PMI. But please believe me, the processeses described by PMI, if you do not follow them, YOU ARE DOOMED to face a bad situation! NOW, would you want to face a bad situation? The project manager's role decides what she/he or his/her project team will face in the course of the project. Enjoy executing the project when you plan it nicely!

Best regards

K A Banerji


A PO is a proposal that the buyer prepares and sends to the seller for the purchase of materials or services they are requiring. The seller then reviews the proposal, PO, and if they accept the conditions of the PO it becomes a contract. We would generally consider this type of contract a Firm Fixed Price Contract however the terms in the PO could be for other types of contracts.

Well stated and concise!