As mentioned in the announcement for this week, contracts are an essential part of business. For the buying department, every purchase order for parts/products/materials to a supplier represents a contract. There are different contract forms depending on what is being ordered, requirements for the buyer and the seller, and the kinds of terms that should apply. Exhibit 14.1 lists some typical contracts that can be used between the buyer and seller.

All the transactions that occur between a buyer and a seller include some form of contractual agreement. It is important to understand what each type of contract commits each party to.

Required information:

Select three (3) of these contracts and do some reading to understand exactly what they mean.

Describe each of the three contracts that you picked.

Identify a product that would be appropriate for each contact.

List a risk for the buyer.

List a risk for the seller.