Fixed-Price Contracts
A fixed-price contract is an agreement where a buyer and a seller set a specific price for a product or service before work begins. This means the seller must deliver what was promised at that price, no matter the actual costs incurred. It's beneficial for buyers who want budget certainty and for sellers who can manage their expenses effectively. However, if unexpected costs arise for the seller, they cannot charge the buyer more; they must absorb those costs. This type of contract is commonly used in construction, manufacturing, and various services.
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A Fixed Price Contract is an agreement between a buyer and a seller where the price is set in advance and does not change, regardless of the actual costs incurred during the project. This type of contract provides certainty for the buyer regarding costs, while the seller assumes the risk of any unexpected expenses. It is commonly used in construction, manufacturing, and service agreements. If the project exceeds the budget, the seller must bear the additional costs, which encourages careful planning and efficient management. However, it may lead to compromises in quality if the seller tries to cut costs.