Which of the following is an example of the simplest fixed-price contract?

The correct answer is B. Purchase order. A Purchase Order (PO) is the simplest fixed-price contract because it is a legally binding document issued by a buyer to a seller specifying goods or services at a predetermined price - no negotiation, no ambiguity, just an offer and acceptance at a fixed cost. A (Purchase…

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Question

Options

APurchase requisition
BPurchase order
CVerbal agreement
DRequest for quote

How the community answered

(22 responses)

A
5% (1)
B
77% (17)
C
5% (1)
D
14% (3)

Explanation

A Purchase Order (PO) is the simplest fixed-price contract because it is a legally binding document issued by a buyer to a seller specifying goods or services at a predetermined price - no negotiation, no ambiguity, just an offer and acceptance at a fixed cost.

A (Purchase Requisition) is an internal document requesting approval to make a purchase; it has no contractual standing between buyer and seller.
C (Verbal Agreement) is a contract in principle, but it is not fixed-price by definition and is difficult to enforce - it's too informal to qualify as the "simplest" fixed-price form.
D (Request for Quote / RFQ) is a solicitation asking vendors to propose a price; it precedes a contract but is not itself one.

Memory tip: Think of a PO as the "receipt before the receipt" - a simple, one-page document that locks in what you're buying and what you'll pay, making it the most straightforward fixed-price agreement in procurement.

Topics

#fixed-price contract#purchase order#contract types#procurement

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