Standard contracts in the purchasing process

A contract creates a legal obligation between your organization and the vendor. A contract specifies details of the agreement, such as the scope of the project and the cost of materials.

After the bidding process is complete and the bid is awarded to a vendor, a standard contract is created. A standard contract creates an initial agreement between the vendor and organization. The standard contract is a binding agreement, and therefore changes cannot be made directly to the standard contract record.

For example, the process of hiring a construction company for building a new restaurant for a budget of $5,000,000 by a hotel owner. With the bidding process, the contractor is identified and the system generates standard contract agreement. The agreement will state that one group is to build the restaurant and the other one must pay $5,000,000.