Purchase Requisition --> Purchase Order + Supplier Confirmation of PO = binding contract. Which term best describes this flow?

Purchase Requisition --> Purchase Order + Supplier Confirmation of PO = binding contract. Which term best describes this flow?

• A. Order of creating a binding contract
• B. Purchase Requisition
• C. Contracting
• D. RFI

Answer: (A)

Understanding how a binding contract forms in procurement hinges on the sequence of events. A purchase requisition is just an internal request to buy something. A purchase order is the buyer’s formal offer to purchase, and it becomes binding only when the supplier acknowledges or confirms it. So the flow describes the order in which a binding contract is created—the steps that lead to an agreement between buyer and supplier. Why this best fits: it highlights that the contract isn’t in place with the requisition alone, and it isn’t about gathering information (that’s RFI), nor is it simply the broad activity of contracting. The emphasis on the sequential creation of the contract—requisition → PO → supplier confirmation—captures the precise flow that yields a binding agreement.

Understanding how a binding contract forms in procurement hinges on the sequence of events. A purchase requisition is just an internal request to buy something. A purchase order is the buyer’s formal offer to purchase, and it becomes binding only when the supplier acknowledges or confirms it. So the flow describes the order in which a binding contract is created—the steps that lead to an agreement between buyer and supplier.

Why this best fits: it highlights that the contract isn’t in place with the requisition alone, and it isn’t about gathering information (that’s RFI), nor is it simply the broad activity of contracting. The emphasis on the sequential creation of the contract—requisition → PO → supplier confirmation—captures the precise flow that yields a binding agreement.