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The difference between a preferred supplier agreement (PSA) and a contract to supply is significant, especially for business buyers. In New Zealand, many businesses, particularly in services like IT and cleaning, utilize PSAs. Unlike supply contracts, PSAs often serve as informal arrangements that facilitate ongoing business relationships. Understanding PSAs is crucial when acquiring a business, as they ensure continuity of service post-sale. For instance, in a carpet cleaning business with a PSA, the mutual trust and informal nature of the agreement allow both parties to operate smoothly, highlighting the importance of these agreements in maintaining business operations during ownership transitions.
