What is a key characteristic of a requirement contract?

A requirement contract is fundamentally characterized by the buyer's obligation to purchase all or a specified portion of their needs for certain goods exclusively from one seller. This means that the buyer cannot source items from multiple sellers, thus fostering a commitment that solidifies the relationship and ensures a steady stream of business for the seller.

The exclusivity aspect of a requirement contract is crucial because it establishes a predictable demand for the seller, who must ensure they can meet the buyer's needs. This arrangement not only aids in planning for production or stocking but also strengthens the seller-buyer relationship. The contract is designed to provide certainty for both parties—guaranteeing supply for the buyer while securing a market for the seller.

While a fixed price for all items can be a feature in some contracts, it is not a defining characteristic of requirement contracts. The focus on exclusivity to one seller is what primarily distinguishes these agreements from other types.

In summary, the defining characteristic lies in the buyer's commitment to procure all needed items from a single seller, creating a specific and exclusive procurement obligation that benefits both parties.