The Difference Between Purchase Agreement and Trade Agreement in Dynamics AX

There are two “agreements” in Dynamics AX 2012 that, at first glance, look quite similar: The purchase agreement and the trade agreement.  I’ll take a stab at explaining the difference between them as concisely as possible.

In Dynamics AX, a Trade Agreement can be thought of as an “if this, than that” mechanism for applying discounts.  Essentially, you can create a rule for pricing and apply it to a particular product, group of products, client, or group of clients.  You can apply all kinds of limitations and exceptions to these rules, such as date ranges. For example, trade agreements in Dynamics AX allow you to realize the following scenarios:

• “If client X purchases more than 100 widgets, they will receive a 12% discount”
• “If any client purchases 10 widgets or more between December 20-24, they will receive $5000 off their order”

But what about a Purchase Agreement?

A purchase agreement is:

a contract that commits an organization to buy a specified quantity or amount by using multiple purchase orders over time. In exchange for this commitment, the buyer receives special prices and discounts.

Purchase agreements override trade agreements.  They represent a commitment by a certain organization to purchase a certain amount.  While it is possible to apply a trade agreement to a single client, trade agreements do not represent a commitment.   You would want to implement a purchase agreement following a price negotiation, for example.

Overall, these two are quite similar in their mechanics as they allow you to create price discounts based on purchase behaviour, but there are two key differences between purchase agreements and trade agreements. Trade agreements are more flexible when applying discounts to a wide range of purchase situations, while a purchase agreement is specific to a client and is representative of a commitment to buy.