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What is a Buy Side Contract?

What is a buy side contract? 

A buy side agreement, also known as a procurement agreement, is a pact between a buyer and a seller to buy products or services. Businesses frequently employ buy side contracts to purchase goods or services from external vendors. They can be used for many things, including vendor management, outsourcing, and procurement. 

 Key features of buy side contracts: 

  • Typically, a buyer and a seller sign into a buy side contract. 
  • They include information about the price, quantity, and delivery date as well as the terms and conditions of the purchase. 
  • Additionally, they might have clauses addressing warranties, indemnification, and dispute resolution. 
  • Buy side contracts are important for businesses because they help to protect their interests and ensure that they get what they bargained for. 

The sourcing landscape is becoming increasingly complex, and expectations of procurement teams go far beyond cost savings. Managing procurement contracts significantly impacts a company’s operational effectiveness and financial integrity.

Contracting and procurement are closely related processes where the team is primarily responsible for creating, negotiating, signing, and managing large-scale vendor and supplier contracts.   

Benefits of buy side contract management 

Using cutting-edge AI-powered contract management software like Zycus Contract Lifecycle Management Software, your procurement teams may be ready to fortify important supplier relationships, remain prepared for untapped opportunities, and have full visibility into the supplier agreements to provide insights on the following: 

  • Renegotiating any agreement’s terms and conditions because of changed priorities. 
  • Acquisition of low-cost product and services from vendors. 
  • Opportunities to save expenses by terminating contracts that are underperforming or no longer necessary to the firm. 

How is a buy side contract different from sell side contract? 

Here is a table that summarizes the differences between buy side contracts and sell side contracts 

Feature  Buy Side Contract  Sell Side Contract 
Perspective  Buyer  Seller 
User  Procurement  Sales 
Goal  Acquire goods or services  Sell goods or services 
Focus  Cost reduction  Revenue generation 
Key terms  Price, delivery terms, warranty terms  Payment terms, delivery terms, warranty terms 
Common provisions  Confidentiality clauses, non-compete clauses, force majeure clauses  Confidentiality clauses, non-solicitation clauses, force majeure clauses 

Read our Blog- Steering Sell-side Contracts Right with Contract Management

Optimize buy side contracts with Zycus CLM 

Zycus CLM helps procurement professionals to: 

Manage Supplier Relationships Better 

You may take appropriate action and manage supplier relationships more successfully with the help of real-time insights from Zycus into which suppliers are abiding by the terms and conditions and which aren’t. 

Speed up the Contracting Process 

Zycus accelerates buy side contracting with automated workflows — right from contract request intake to authoring, negotiations, reviews, approvals, and even post-award contract tracking. 

Integrate with ERP 

Our CLM platform offers watertight integration with Salesforce, MS-Outlook, and MS-Word — enabling you to easily manage buy side contract requests, pull data directly into contracts, and work within a familiar interface. 

Track Vendor Performance 

Monitor spending in accordance with supplier agreements – this information is gathered in dashboards and is also accessible through bespoke reports. To prevent non-compliance, Zycus AI engine Merlin Protector keeps track on contract milestones and performance and alerts users in the event of any disagreement. 

Manage Budget Smartly 

Zycus provides visibility into total value and number of contracts signed for a product or service, which helps in budget forecasts. The automated alerts prevent auto-renewal of an agreement planned to be canceled — further helping your team to manage the budget. 

Negotiate Better Deals 

Negotiating a buy side contract becomes easier with all the parties working on a common platform. Automated workflow, redlining, version history, and visibility into the stages make the negotiations collaborative rather than combative 

Stay Audit Ready 

Zycus enables users to track and save all edits made during the authoring, negotiation and approvals. With this comprehensive audit trail (what was changed, the time when it was changed, the person who changed it, etc.), your team will always be ready to face a compliance audit. 

Identify Revenue Opportunities 

After deciphering the entitlements, our AI-driven solutions capture the terms of goods and services, prices, discounts, rebates, and incentives, allowing your business to maximize the value of buy side contracts. 

Enjoy a Short Pre-award Phase 

Merlin Guide’s pre-approved clauses and extensive template libraries expedite contract authoring. Automated alerts send notifications to the appropriate parties about revisions, redlines, and approvals, enhancing flexibility and promoting quicker approvals. 

Zycus Positioned As A Leader In Contract Lifecycle Management For Buy-Side By An Independent Research Firm

To sum up — speeding up the CLM process, we drive more visibility and reduce the impact of potential risks. We improve contract performance and compliance throughout the procurement process — enabling you to focus on saving time and resources. So, don’t you think it’s high time for your procurement team to take advantage of a robust CLM like Zycus? What are you waiting for? Get in touch with us or request a demo today. 

Frequently Asked Questions 

What are the four types of procurement contracts? 

The four main types of procurement contracts are: 

Fixed price contracts:

The buyer agrees to pay a fixed price for goods or services in a fixed price contract, regardless of the actual cost to the seller. These contracts are mostly used when the buyer wants to know exactly what the cost will amount to.  

Cost-reimbursable contracts:

In a cost-reimbursable contract, the buyer agrees to reimburse the seller for the actual cost of the goods or services, plus a fee. These contracts are usually used when the buyer is not sure what the actual cost will amount to. 

Time and materials contracts:

A time and materials agreement commits the buyer to paying the vendor for the labor and supplies required to deliver the goods or services. This type of contract is often used when the buyer needs flexibility in the amount of work that will be done. 

Hybrid contracts:

Hybrid contracts are a combination of two or more of the other types of procurement contracts. This type of contract can be used to get the best of both worlds. 

What are the key components of buy side contracts? 

The key components of buy-side contracts are the same as any other contract, but there are some specific elements that are often included in these types of contracts. These include: 

 The parties to the contract:

This should include the full legal names of the buyer and seller along with their contact information. 

The subject matter of the contract:

This should clearly state what goods or services are being purchased, as well as the quantity and price. 

The terms of payment:

This should specify when and how the buyer will pay for the goods or services. 

The delivery terms:

This should specify when and how the goods or services will be delivered to the buyer. 

The warranty terms:

This should specify any warranties that the seller is making about the goods or services. 

The dispute resolution terms:

This should specify how any disputes between the parties will be resolved. 

In addition to these basic elements, buy-side contracts may also include other specific provisions, such as: 

Confidentiality clauses:

These clauses protect confidential information that is shared between the parties. 

Non-compete clauses:

These clauses prevent the seller from competing with the buyer after the contract expires. 

Force majeure clauses:

These clauses excuse the parties from their obligations under the contract if they are unable to perform due to unforeseen circumstances.  The specific key components of a buy-side contract will vary depending on the specific goods or services being purchased and the needs of the buyer.  

What are the risks of buy-side contracts? 

Legal risks:

Buy side contracts can be complex and there is a risk that they may not be properly drafted or negotiated. This can lead to legal disputes between the buyer and the seller. 

Financial risks:

The buyer may be exposed to financial risk if the seller fails to deliver the goods or services as promised. This could lead to financial losses for the buyer. 

Operational risks:

Buy side contracts can also have operational risks. For example, if the seller fails to deliver the goods or services on time, this could disrupt the buyer’s operations. 

Compliance risk:

Buy side contracts may also have compliance risks. For example, the buyer may need to ensure that the contract complies with all applicable laws and regulations.

Related Read:

Steering Sell-side Contracts Right with Contract Management


Anthony Scannell is the Director of Sales at Zycus, a leading provider of cognitive contract software solutions. With over a decade of experience in the field, he has become a subject matter expert for Contract Lifecycle Management (CLM), helping organizations streamline their contract processes, increase compliance, and reduce risk. Anthony’s expertise in CLM has helped numerous clients achieve their contracting goals and drive bottom-line results. He is known for his deep understanding of the complexities of the agreement process and his ability to present solutions that meet the unique needs of each client. Anthony’s dedication to customer success and his passion for CLM make him an invaluable asset to the Zycus team.
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