Purchasing contracts are applied in sectors and businesses of all kinds, although governments and large companies use them the most. Any transaction involving the purchase of goods or services from a seller or other external source should ideally be subject to such a contract. If the products or services are purchased in-house and do not concern an outside area, there is no need for a contract. There are different types of public procurement and their adequacy depends on the specific application scenario. An example of a market might be suitable for a fixed-price contract in one scenario, but not in another scenario. What is a purchase agreement? Purchase contracts are contracts that form the legal framework for any transaction in which the purchaser (usually governments or companies) wishes to purchase goods or services of any kind. It determines the relationship between the contracting parties, the remuneration, the payment method and all the other important details of the transaction. It is in the buyer`s best interest to design a contract that explicitly and effectively sets out the terms of the transaction in order to avoid disputes that could result from miscommunication. The main terms of a purchase agreement include the names and descriptions of the parties, the effective date of the contract, the relevant jurisdiction, the terms of pay, the location, the schedule, the exclusions and possible provisions relating to alternative dispute resolution methods. It must also provide details of the goods or services to be acquired, the method of selecting products and suppliers, the methods of negotiation and the conditions of delivery.