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A preferred supplier agreement (PSA) differs from a contract to supply in that it often establishes a long-term relationship with suppliers without strict service delivery terms. Many New Zealand businesses utilize PSAs, particularly for services like IT and cleaning, to facilitate smooth operations. While a PSA indicates a preferred provider, it is not a binding contract; thus, it lacks formal obligations regarding service levels. Understanding this distinction is crucial, especially during business sales when new buyers seek continuity of service. For instance, a carpet cleaning business might have a casual agreement with a supplier that fosters collaboration, yet lacks the formalities of a contractual supply arrangement.
