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What Is a Requirements Contract?

A requirements contract is a written agreement wherein a buyer agrees to purchase an amount of needed product only from a certain seller. It is a contract where the seller agrees to supply a certain amount of goods or services that is required by the buyer. The buyer will then commit that he will only purchase that product from that seller. It is kind of a give and take agreement wherein the supplier would agree to sell a chosen product that the buyer needs. In return the buyer will agree to purchase the same product from that one and only supplier. This is not the same with an output contract wherein the buyer would agree to purchase all kinds of products that the seller or manufacturer supplies. The requirements contract only refers to a particular product. For example, if a business company enters into a contract that it will purchase all of their needed monitors in one particular computer company. Then all of the business company’s monitors should be branded or bought from that contracted computer company. But if then they were to buy other monitors from a different supplier, then it is considered a breach of contract.

There are also some problems in a requirements contract. One of this is called consideration. This happens when the buyer stops from purchasing from the supplier. It does not breach the contract because the buyer would stop only because it does not need any more of the product but it does not mean that the buyer is purchasing from another supplier since the contracts only settlement is to purchase the amount needed by the buyer.

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