A corporation has two subsidiary businesses, set up as separate legal entities. The one business will be purchasing a new item from the other, and has negotiated for a discount for the first six months of the deal.
You are required to make sure that system will apply the discount for the time stipulated.
Which of the following is the type of agreement you should configure?
To apply a discount for a limited time in a business transaction between two subsidiaries, the appropriate configuration would be a Trade Agreement. Trade Agreements in business systems such as ERP software can include specific terms, including time-bound discounts, without the need for commitments on quantity, value, or category, which are necessary for sales or purchase agreements. Thus, a Trade Agreement allows flexibility to manage the specific terms of the discount application for the stipulated period.
No commitments of quantity, value, or category are stated which are requirements of a purchase or sales agreement. Thus, the answer D Trade Agreement is correct.
The described relates to a trade agreement and not a sales agreement because: "A sales agreement is a contract that commits the customer to buy products in a specific quantity or for a specific amount over time, in exchange for special prices, special discounts, and other special terms, such as payment and delivery terms. The prices and discounts of the sales agreement override the prices and discounts that are stated in any trade agreements that exist" https://learn.microsoft.com/en-us/dynamics365/supply-chain/sales-marketing/sales-agreements
Why not a Sales agreement??
It has a time limit - shouldn't it be a sales or purchase agreement (depending on which company it is set up in)? Trade agreements are not limited by a validity period and sales/purchase agreements override any trade agreement in place.
You can specify a validity period on trade agreements. The answer is D because there is no Quantity, Value or Category commitment.
C is Purchase Agreement
D is correct.
Why not A?
Trade agreement is right
Why note sales agreement?