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A preferred supplier agreement (PSA) differs from a standard contract to supply services. Many businesses in New Zealand, particularly service providers like IT and cleaning firms, operate under PSAs. These agreements are prevalent but do not constitute formal contracts. Understanding PSAs is crucial, especially during business sales, as buyers seek continuity of service post-acquisition. For example, in a carpet cleaning business, a PSA may exist informally due to the good relationship between the parties, allowing them to conduct business smoothly. It's important to distinguish these arrangements from formal service contracts to ensure clear expectations and obligations.
