From the course: Supply Chain Foundations: Strategic Contract Management
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Defining a contract
From the course: Supply Chain Foundations: Strategic Contract Management
Defining a contract
- [Instructor] Samuel Goldwyn, the famous movie producer once said that a verbal contract isn't worth the paper it's written on. Most people agree in business and in your personal life, you really need to get the contract in writing. But what is a contract? Basically, it's a voluntary agreement between two or more parties, and there are three essential features of a contract. First, there is an offer. One party makes an offer to the other. The buyer notifies appropriate sellers that they're interested in making a purchase, usually with a request for quote. The seller then offers to sell that item for a specific price. Then the buyer must decide whether to accept the offer or not. Of course, usually the buyer does not immediately accept the first offer. There may be some negotiations concerning price and other important aspects. The third feature is especially important. A valid contract must also include consideration. This means that value is provided to both the buyer and the…
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