Final answer:
A requirements contract is a type of contract in which a buyer agrees to purchase goods or services exclusively from a particular seller based on the buyer's requirements or needs. It provides flexibility for the buyer while ensuring a steady stream of business for the seller.
Step-by-step explanation:
A requirements contract is a type of contract in which a buyer agrees to purchase goods or services exclusively from a particular seller. It is called a requirements contract because it is based on the buyer's requirements or needs. In this type of contract, the buyer is not obligated to purchase a specific quantity or amount, but only what he or she wishes to buy.
For example, let's say a company enters into a requirements contract with a supplier for office supplies. The contract specifies that the buyer will purchase all of their office supplies exclusively from the supplier. However, the buyer is not required to purchase a fixed quantity of supplies, but only what they need.
Requirements contracts are often used in situations where the buyer's requirements may vary over time, or when the buyer wants a long-term commitment from a specific seller. They provide flexibility for the buyer while ensuring a steady stream of business for the seller.