Forms of Contracts - Assignment Example

If the products are not of the best quality or have not met the requirements, the small business owner can reduce the price due to underperformance. Incentives are also provided which will lead to meeting the quality standards (Stanberry, 2012). Determine which form of contracting would be the most cost-effective for a small business in your hometown. Support your answer with data from a small local business.The most cost-effective is the multiyear contract where the contract is awarded for a period between 1 to 5 years and this reduces the costs of seeking contracts each year, advertising, the administrative budgets among other costs that arise with seeking contractors every year (Stanberry, 2012).

An example of this is Canycom which is located in Bellevue in Washington. This is a brush cutting company that deals with the distribution of ride-on brush cutters to the operators within than area. They seek multiyear contacts with rental companies in the areas which last for even three years and hence do not need to keep on looking for new people to supply to.