The first thing is to have a policy that only projects of a certain size are done via a customer-issued PO. Acknowledge that you received the PO, but not that it is a contract between you and the customer. Instead, send them a sales and installation agreement that has your terms and conditions attached. These forms are available on NSCA’s Essentials of Systems Integration Online. Obviously, the terms and conditions would then address payments, delays, cancellations, etc.
If you are stuck with a cancelled order and restocking charges, evaluate the relationship between you and the customer. If it is long term, do what you can to satisfy the request and keep yourself in the transaction. Absorbing a restocking charge may be worth it in the end. But, if there is no future business to salvage, then contact your attorney for a legal opinion.
The last resort is to leverage the relationship between you and your vendor. It would be unfair unless they have a new technology upgrade policy in place. Forcing a manufacturer to take back products when it has a policy in place will usually harm that relationship. It’s seldom worth it.
In almost every scenario, work from a contract that incorporates your business terms and conditions. It’s easier said than done, I know. But, especially in this economy, projects can fall apart at any time. In order of importance, I would always include deposits, payment terms, sales tax, removal and disposal of existing/unused materials, storage and progress billings, treatment of non-scope work, schedule delays and unexpected OT, cancellation and restocking. But, when would that stuff ever appear on a purchase order?