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How long are Purchase orders valid after a Stop work order is issued

In July of 2018 we signed a purchase order agreeing to supply materials in accordance with our terms. Terms are 50% deposit before we place the order. We did not receive the deposit and we did not place the order. In September of 2018 we received a stop work letter for all subcontractors and suppliers on the project. Now it is January 2020 and the company is requesting we fulfill our PO obligation. Are we legally obligated to perform this after such a long stop work order? We told them the only way we would be able to do it is with an increased price due to recent tariffs and AD and they are saying that is not acceptable or that the new price we quoted is too high. The stop work order was due to owners failure to pay the GC. If we go through with this project along with the higher price we would prefer our payment terms change to 75% up front or 100% upfront.

1 reply

Feb 3, 2020

Ultimately, that may come down to the terms of the contract or even the terms on the stop work order. If either document contains language that'd be relevant to how long a work stoppage might continue before it's considered a termination, then that'd be very relevant. Further, if there's an escalation clause present in the supplier's purchase terms or on the order itself, then it might be possible to raise the price for the order as a result of increased tariffs or other circumstances that didn't exist at the time of the order. However, after a stoppage of 2+ years, it'd seem like a supplier would no longer be bound to the terms of a purchase agreement two years prior. This would seem particularly true where the customer failed to actually place an order in line with the terms supplier's terms (i.e. failing to pay a required deposit). But again - the terms of the purchase order and the behavior of the parties will be crucial for determining how the dispute should turn. So, if it escalates, it'd likely be a good idea to consult a local construction or real estate attorney to have them review the situation and relevant documentation. Then, they'll be able to advise on your rights and how best to move forward.

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