# What is a Term Contract?

URL: https://www.procureflow.ai/docs/faq/rfq/what-is-term-contract



A Term Contract is a long-term agreement between a buyer and supplier to provide goods or services at pre-agreed prices over a specified period (e.g., 6 months, 1 year, or longer).

For Buyers [#for-buyers]

A Term Contract allows you to:

* **Lock in pricing** — Secure stable prices for frequently purchased items, protecting against market fluctuations
* **Streamline procurement** — Place orders directly against the contract without running a new RFQ each time
* **Reduce administrative overhead** — Minimize repetitive sourcing for recurring needs
* **Ensure supply availability** — Guarantee access to critical items from a committed supplier

For Suppliers [#for-suppliers]

A Term Contract provides you with:

* **Predictable revenue** — Secure a steady stream of orders over the contract duration
* **Simplified sales process** — Receive orders directly without competing in new RFQs for each purchase
* **Stronger buyer relationships** — Build long-term partnerships with committed customers
* **Better planning** — Forecast demand and manage inventory more effectively

Things to Note for Suppliers [#things-to-note-for-suppliers]

When participating in a Term Contract RFQ, keep these considerations in mind:

* **Price commitment** — Your quoted prices are locked for the contract duration. Factor in potential cost increases before submitting.
* **Quantities are estimates** — Actual order volumes may vary. Do not assume guaranteed minimums unless explicitly stated.
* **Capacity and delivery** — Ensure you can consistently fulfill orders on short notice throughout the contract period.