If you are a freelancer or a small business owner, you might have come across the terms “standing offer” and “contract.” These are two different arrangements that businesses use to hire services or goods from vendors. In this article, we will explain the differences between standing offers and contracts so that you can make an informed decision when deciding which one to pursue.

What is a Standing Offer?

A standing offer is an agreement between a buyer and a seller that outlines the terms and conditions of an ongoing business relationship. This agreement typically covers a specific period, usually one year, with the option for renewal. Under a standing offer, the vendor agrees to supply the buyer with goods or services as and when needed, at pre-negotiated prices. This means that the vendor doesn`t have to submit a proposal for every transaction, saving time and effort.

Standing offers are commonly used for purchasing goods or services of low or moderate value, such as office supplies, maintenance and repair services, or IT support. They are also popular in the public sector, where government agencies use standing offers to streamline procurement processes and promote fairness and transparency.

What is a Contract?

A contract, on the other hand, is a legal agreement between two parties that sets out the terms and conditions of a specific transaction or project. A contract outlines the scope of work, the deliverables, the payment terms, and any other relevant details. Unlike a standing offer, a contract is a one-time deal, and it typically requires a proposal or a bid from the vendor.

Contracts are commonly used for purchasing goods or services of high value, such as construction projects, consulting services, or software development. A contract provides both parties with legal protection and clarity, ensuring that they are on the same page regarding expectations, deadlines, and compensation.

Standing Offer vs. Contract: Which One to Choose?

Whether you should pursue a standing offer or a contract depends on various factors:

– Value: If the value of the project or purchase is low to moderate, a standing offer would be a more efficient and cost-effective option. If the value is high, a contract would provide more security and clarity.

– Frequency: If you anticipate needing the same goods or services repeatedly over a year or more, a standing offer would be more convenient. If you have a one-time project, a contract would be more appropriate.

– Flexibility: A standing offer allows for flexibility and quick turnaround times. A contract is more rigid but provides more control and protection.

– Competition: If the market is competitive, a contract would be more suitable as it allows for more negotiation and ensures transparency in the bidding process.

In conclusion, both standing offers and contracts have their advantages and disadvantages. The choice between the two depends on the specific circumstances of the business relationship. As a vendor, it is crucial to understand the differences between the two and choose the option that best aligns with your needs and capabilities.