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A preferred supplier agreement (PSA) and a contract to supply are distinct concepts that many businesses, particularly in New Zealand, utilize. PSAs are commonly established with service suppliers such as IT or cleaning services, while contracts are more formal arrangements. The significance of a PSA becomes evident during a business sale, as buyers often seek assurance of service continuity post-sale. For instance, in the case of a carpet cleaning business, a PSA might exist based on a mutual understanding rather than a formal contract, allowing both parties to maintain a working relationship. Understanding these agreements is crucial for business buyers.
