Contract with Ford? You’ll Want to Read This Today.

A few months ago, Ford Motor Company issued new Production Purchasing Global Terms and Conditions, which govern the purchase of goods, services and tech products (including tooling and service parts) purchased on or after today, July 1, 2021 (“New Terms”). This is the first substantial change in Ford’s terms since 2004.

Do you currently have a contract with Ford? If Ford’s terms apply to your contract, section 3 of the New Terms (confusingly) sets forth which set of Ford’s terms (the 2004 Terms or the New Terms) govern your supply relationship. We’re here to help clarify.  

According to the New Terms, the Purchase Order includes: 

1. The Production Purchasing Global Terms and Conditions (either the New Terms or the 2004 Terms).
2. The Supplier Guides.
3. Any other applicable documents issued by Ford or signed by Ford and the Supplier. 

These documents are referred to collectively as the “General Purchase Order Documents.”

Important to note: The date that the Purchase Order went into effect (“Effective Date”) is shown on the Purchase Order.

Additionally: 

1. If Ford’s terms apply to your contract, the General Purchase Order Documents in effect on the Effective Date govern. 
2. For Purchase Orders that are renewed, the General Purchase Order Documents in effect on July 1 of the “Renewal Term” (defined below) will apply to the Purchase Order. 
3. For Blanket Purchase Orders, the General Purchase Order Documents in effect at the time of a Release will apply. 

Section 7 of the New Terms sets forth the duration of the Purchase Order. Here is a breakdown: 

• The “Initial Term” of the contract begins on the Effective Date on the Purchase Order and expires on June 30 of the next calendar year.
  • If, for example, a Purchase Order is issued on July 1, 2021, the Initial Term will end on June 30, 2022. 
• Purchase Orders will automatically renew on July 1 for an additional 12 months, ending on the next June 30, unless a notice of non-renewal has been provided. This is the “Renewal Term.” 
• The Purchase Orders will automatically renew each subsequent year for an additional Renewal Term of 12 months, unless a notice of non-renewal has been provided. 

Still confused? Here are two examples: 

1. Purchase Order Effective Date: January 1, 2021
   • If Ford’s terms apply to your contract, the General Purchase Order Documents in effect on January 1, 2021, will govern.
     • Because the 2004 Terms were in effect on January 1, 2021, the 2004 Terms will govern.
   • The Purchase Order will expire on June 30, 2022.
   • Unless a notice of non-renewal of the Purchase Order is provided, the Purchase Order will automatically renew on July 1, 2022, for an additional 12 months, ending on June 30, 2023.
   • If the Purchase Order is renewed, the General Purchase Order Documents in effect on July 1, 2022 will apply.
     • In that instance, so long as Ford does not issue another new set of terms in the interim, the New Terms will govern starting on July 1, 2022. 
2. Purchase Order Effective Date: July 1, 2021 (or any date thereafter in year 2021)
   • If Ford’s terms apply to your contract, the General Purchase Order Documents in effect on July 1, 2021 (or the date thereafter in year 2021), will govern.
     • Because the New Terms are effective on July 1, 2021, the New Terms will govern.
   • The Purchase Order will expire on June 30, 2022.
   • Unless a notice of non-renewal of the Purchase Order is provided, the Purchase Order will automatically renew on July 1, 2022, for an additional 12 months, ending on June 30, 2023.
   • If the Purchase Order is renewed, the General Purchase Order Documents in effect on July 1, 2022, will apply.
     • In that instance, so long as Ford does not issue another new set of terms in the interim, the New Terms will govern on July 1, 2022.

If you have any questions about which contract documents and/or terms govern your supply relationship with Ford, please contact Katelyn Crysler or your Warner Automotive Industry Group attorney.