One off contracts in purchases is not an uncommon set up, when talking about the various types of contractual agreements between suppliers and buyers.
The key element of a one off contract is that it relates to a single purchase. Remember that this is not the same as a single item purchase. Think of this as the type of contract where you order something it is delivered you pay and you are done. If you need such item again, you are free to get it from another supplier.
One-off purchase contracts can be used for goods, services or works. If you are running a business, you can use these contracts on when undertaking one-off purchases which could range from;
- Low-value new purchase or occasional re-buys, such as replacement item of office furniture or unusual stationery
- The contracting of one-off service, such as an office re-decoration or re-location
- The procurement of a high-value, long lifecycle capital asset, such as a building, IT system or plant machinery.
How exactly do one off contracts work?
What you need to understand about these contracts is that they relate to a one-off purchase, basically a straight forward contract of the sale of good or a service that;
Commits both buyer and supplier to all the terms relevant to supply of the specified requirement, in a specific case
By getting in this contract both the buyer and the supplier are legally bound to perform all the specific terms of the contract, in this case to buy and supply the agreed quantity and quality of goods at the agreed time, for the agreed price.
In short:
- The offer to supply goods on a one-off basis is a straightforward offer, and should include all the terms and condition on which the goods will be supplied. This may take the form of a letter of offer, bid or tender, or a detailed and specific quotation, offering to meet the buyer’s specified requirements together with the supplier’s terms and conditions of supply.
- The one off contract will be completed when the buyer accepts the tender, or issues a purchase order which conforms in all its terms to the supplier’s offer (otherwise this is a counter offer or you have the beginning of battle of forms)
- Once the contract has been completed by agreeing on specification and terms;
- the buyer is legally bound to purchase from the supplier the stated quantity of the product at the agreed price, on the agreed terms and;
- the supplier is legally bound to supply the buyer with the specified requirements at the agreed price and time, on the agreed terms
Only commits the buyer and supplier to purchase and supply of the specified requirement, in a specific case
The one-off purchase is intended to only commit the buyer and supplier to purchase and supply of that specified requirement.
Basically:
- The buyer is completely free to switch suppliers for future requirements of the same item. This enables the purchaser to take advantage of opportunistic spot buying and/or competition (which they can do through auctions or tenders) to get a better deal from another supplier next time, or to change the specification and amount of the requirements, or to change the terms and conditions of business.
- The supplier is completely free to change its prices, terms and conditions when bidding or negotiating to supply future requirements of the same item or nature, or indeed, to choose not to supply the buyer at all, for instance, if its order book is full, or the buyer is simply no longer an attractive customer