Rejecting an order is hard to do. There’s the voice in the back of your head warning that you may lose the customer altogether.
Depending on your industry, there’s a risk with every order you fill. You know those risks like the back of your hand. However, it’s not like you have zero control. You take measures to reduce your risks every day. When it comes to POs, minimizing the risk starts with those who process them.
Your order-entry and sales personnel are a great line of defense for catching any deal-breakers that find their way onto a PO. Train them well and save yourself some headaches.
Personnel should decline a purchase order in the following circumstances:

PO lists incorrect credit terms
Pricing is incorrect
PO references a return policy that doesn’t match yours
PO lists penalty clauses that are not part of your normal terms of sale
PO lists FOB (freight on board) terms that differ from yours
PO lists a different legal name from your records

It is important to note that to decline a PO does not mean you have to give up on the sale. It just means that you need to discuss changes that need to be made with your customer before the PO can be approved. A botched PO that makes it through the entire fulfillment process can be a potential problem later on. An incorrect price, for instance, may lose your money to the customer’s gain. And he’s going to do exactly what you think he’s going to do: hold you to the price on the PO. And he’d be in the right.
Insist upon careful inspection of every PO down to the letter and insist upon written amendments (no oral agreements allowed). Make it right the first time to avoid wasted time and money.