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A preferred supplier agreement (PSA) differs from a contract to supply services, both of which many businesses in New Zealand utilize. A PSA is common, particularly for service providers like IT or cleaning services, and is not equivalent to a binding contract. Understanding PSAs is crucial, especially during the sale of a business, as buyers seek continuity of service after acquisition. For instance, a carpet cleaning business might operate under a PSA or a more informal agreement based on mutual trust, allowing them to conduct business without a formal contract. Such casual arrangements highlight the flexible nature of PSAs in maintaining supplier relationships.