A requirements contract is a type of agreement in which one party agrees to supply goods or services to another party for a specified period, based on the latter’s requirements. Unlike a traditional contract that specifies quantities, prices, and delivery schedules for specific items, a requirements contract focuses on fulfilling the buyer’s needs as they arise during the contract term. The buyer is obligated to purchase their needs exclusively from the seller, while the seller is obligated to meet those needs as they arise, up to the maximum quantity stipulated in the contract. Requirements contracts provide flexibility for the buyer while guaranteeing business for the seller, fostering a long-term relationship between the parties involved.
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This glossary post was last updated: 29th March, 2024.
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