To understand orders and sales contracts, it is first necessary to have basic knowledge of how a contract is established. For the purposes of this discussion, the example of a buyer who wishes to purchase goods from a seller is used. The delivery plan serves to maintain the needs of a party that can be delivered several times during the period of validity of the contract. Exact delivery dates and delivery quantities can be set = manually or by current arrangement. An order is established before an agreement is concluded between the parties: the buyer sends the order to the seller, who then has the choice to adopt it. In the case of a sales contract, the parties have drawn up their agreement in advance and the sales contract is the written expression of this contract. A lump sum order, also known as a framework purchase agreement or call order, is an order that a customer places with a supplier in order to allow multiple delivery dates over a generally negotiated period in order to exploit the benefits of predetermined prices. These are usually used when there is a recurring need for consumable goods. Flat-rate orders are also legal documents as soon as they have been accepted by the supplier, but do not remove the need for a formal contract with the supplier. There are no rules on when both types of documents should be used. The use of an order or contract depends on the nature of the purchase or the usual practice of the sector.
For example, real estate transactions are carried out with a sales contract, not with an order. In the case of a government contract, the rules or directives of the government agency may prescribe the nature of the document to be used. On the other hand, a treaty is a legally binding agreement to do something or refrain from doing anything. Contracts can exist between individuals, companies, organizations or government authorities. While many contracts are written (and it`s a good practice to have a written agreement). In the SAP MM purchasing component, a contract is a kind of framework sales contract, under which release orders can be awarded for the agreed materials or services, as needed, for a given period of time. . . .