There is no group in society that makes more contracts than purchasing agents. Their job is to make contracts for their businesses. New laws are subjected to careful drafting, debate and redrafting before they become enacted. While a contract is not a statute, it has often been referred to as a "private law" between the parties to the contract. The contract may be evidenced by a formal, negotiated document that both parties carefully consider, line by line. The great majority of contracts, however, are not that carefully considered before they are made. They often consist of purchase order and acknowledgment forms or perhaps just one confirmation in the form of a confirming purchase order or an invoice from a supplier. They may not include all of the terms the parties intended when the contract was made. The lack of attention devoted to the creation of these contracts—these "private laws"— leads to thousands of contract disputes every year. It is impossible to know exactly how many contract disputes arise annually because they are officially recorded only when one party sues another for breach of contract.

One study reveals that there were almost 365,000 contract cases filed in the state courts of the largest 75 counties in the U. S. in one year. In addition to these state court cases, about twenty-five thousand contracts cases are filed in federal courts every year. To sue someone for breach of contract in a federal court, there must be something called "diversity of citizenship" (the parties must come from different jurisdictions) and the amount in controversy must be at least $75,000. Of the 365,000 filed state cases in the one-year study, over 180,000 were settled without any trial. Almost 95,000 resulted in what are called "default judgments" which means that the party sued (the defendant) did not contest the action but allowed judgment to be rendered against it by default. Almost ten thousand of these state cases were actually tried by a judge, sometimes with a jury. About 20,000 were quickly decided by something called a "summary judgment" which means that the court decided the case quickly on the bare information initially presented by the parties. Almost 44,000 of these cases were "dismissed" because it was obvious that the suing party (the plaintiff) could not allege sufficient facts to prove a breach of contract. Some of these cases (about 7,000) were decided in arbitration which is an alternate dispute resolution process that may involve three arbitrators, each party appointing one, and then, either agreeing on the third arbitrator of having an organization like the American Association of Arbitrators provide a list from which the third arbitrator is chosen. These thousands of filed cases do not, by any means, represent the total number of contract disputes that occur every year. Many more contract disputes are settled without any official intervention. Buyers and sellers of goods or services may resolve the dispute without the help of courts or lawyers. Even when one or more lawyers becomes involved, thousands of disputes are settled without a case being filed in a court. Sometimes a buyer who has what appears to be a just cause for suing chooses to avoid a legal action because the buyer needs the continuing source of supply that the supplier provides. Similarly, a supplier may believe it has a strong breach of contract case against a buyer, but chooses to ignore the breach and continue the relationship because the retention of the customer is more important than winning a lawsuit that will terminate that relationship. "Winning" a lawsuit does not begin to cover the expenses of the lawsuit. Unless there is an enforceable clause to the contrary, the winner must still pay its attorney and there are many other costs as well as considerable disruption and worry in the employees involved in the lawsuit. Anyone who has ever been "deposed" knows that it can be an unpleasant experience where lawyers for the opposing party are free to ask many questions which must be answered under oath. Opposing counsel can procure a vast array of documents in preparation for the trial. And then, of course, there is a possibility of a negative result. The courtroom is something like the operating room: two things can happen and one of them is bad.

Like surgery, lawsuits are sometimes inevitable, regardless of great care taken to avoid them. There are, however, innumerable lawsuits every year that could have been avoided by more careful contract planning, the drafting of appropriate contract language that anticipates potential problems, and purchasing agents who are sufficiently aware of basic legal principles to avoid conduct that places their company in legal jeopardy. When a purchasing manager is eager to make a deal and her counterpart representing the supplier is equally eager, they wear rose-colored glasses. They are not contemplating all of the possible events that could disrupt the relationship. They are happy with the deal and with each other. The lawyer's job is to consider a panoply of possible negative events. The parties may not be pleased when the lawyer insists that these possible negative events be considered. They often make contracts with little or no thought of such consequences and the evidence of their contract reflects this sloppy thinking. Buyers often use the standard purchase order which they may believe provides complete legal protection. On the other side, the seller uses the acknowledgment form prepared by its lawyer to provide complete protection. Anyone in business should, however, know that the "battle of the forms" may produce unhappy results that were not contemplated. Beyond their "ironclad" forms, the parties may have made statements to each other or conducted themselves in such a fashion as to trump the terms of the form which the lawyer has so carefully constructed as protection for the client.

Buyers may be very skilled in arranging the best deals for their companies, but the best deals can be destroyed by legal mistakes. There are millions of purchase order and acknowledgment forms exchanged every day. The buyer and seller each go to sleep at night thinking they have made an enforceable agreement—a contract—their "private law" that governs their relationship. Often, however, their exchange of these detailed printed forms may not have formed any contract at all. While the development of e-commerce has facilitated the creation of contracts with greater speed and less expense, it would be folly to assume that just because the medium has changed from paper to an electronic record that similar mistakes will not ensue. If a contract has been made, what are its terms? Otherwise very bright and capable purchasing agents and sales representatives have little idea of what the printed terms (the "boilerplate") on their own forms much less the other party's form really means in terms of its legal effect. As a result, the terms are typically ignored and could result in perilous legal consequences as thousands of cases attest.

The solution to this dilemma is more legal education for purchasing managers and agents. The object is not to make lawyers of purchasing people. Rather, the purpose of such education is to provide the purchasing agent with a sufficient appreciation of the legal rules and consequences to allow that agent to avoid making egregious mistakes. Every purchasing agent cannot have a lawyer at her elbow whenever she makes a contract for her company. She can, however, become aware of danger signals alerting her to possible trouble which she can then discuss with the legal department.

It is important that the purchasing agent not attempt to be his own lawyer. It is, however, very important for the purchasing agent to be able to bring intelligent questions to the lawyer. If the agent has no idea of what he is doing legally, he will be more than reluctant to ask questions. It is vitally important to change the culture of discussions between the purchasing department and the legal department. When the agent is unaware of legal consequences, he doesn't want to embarrass himself by raising questions with "legal." It is, however, much more important not to subject his company to unnecessary litigation since he has a legal duty to serve his company in the most responsible manner. Company lawyers are anything but blameless in this scenario. Lawyers may not be nearly as responsive as they should be to questions by purchasing people. They may respond in some condescending manner that will assure the absence of further inquiries by purchasing. Even if the lawyer is not condescending, he may not take the time or effort to explain the law carefully and in a way that someone not legally trained would understand. His answers may be filled with technical legal language, guaranteed to avoid further discussion of the best practices that should be followed to avoid litigation.

The ideal is to assure basic legal education for purchasing agents and for lawyers to work with agents as equal team members. Legal education may be obtained "in house," through sessions with company lawyers. It may be obtained elsewhere may be even more desirable because it prompts questions and discussion between the purchasing and legal departments. The purchasing agent should not have the slightest reluctance to discuss legal matters with company lawyers. The agents are making contracts for the company. The lawyer should be willing and eager to achieve a result that is in the best interests of the company.