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The video tutorial discusses the differences between a preferred supplier agreement (PSA) and a contract to supply services. Many businesses, especially in New Zealand, typically utilize preferred supplier agreements with service providers like IT and cleaning companies. A PSA is not the same as a formal contract; it serves as a recognition of mutual goodwill and ongoing collaboration. This is particularly relevant during a business sale, as potential buyers consider the PSA for continuity of service after the acquisition. An example is given of a carpet cleaning business operating on a PSA or casual agreement, highlighting that such arrangements often depend on the parties’ relationship rather than formal contractual obligations.
