What is the difference between a public contract and a private one?
Difference between a public and a private contract
A public contract and a private one differ mainly in the parties involved and the purpose of the contract. Here is a description of each contract type along with examples to illustrate the differences:
- A public contract is an agreement entered into between a government entity (such as a municipal, state, or federal government) and a private entity (individual, business, or organization) for the provision of goods, services, or construction. These contracts are subject to specific regulations and procedures established by law and are carried out in the name of the public interest.
An example of a public contract would be the following: A municipal government is seeking to build a new bridge. It calls for a public tender in which construction companies can submit proposals. The company that offers the best proposal in terms of cost, quality and technical capacity could win the contract to build the bridge. This contract is a public contract because it involves a government entity and is related to public infrastructure.
- On the other hand, a private contract is an agreement between two or more private parties that establish rights and obligations between them. These contracts do not involve a government entity and are generally governed by private contract laws and business regulations. They can cover a wide range of agreements, such as lease agreements, purchase and sale agreements, employment contracts, etc.
As an example for the private contract, suppose two companies, one that makes electronics and the other that sells electronics, decide to enter into a supply agreement. The component company agrees to provide the necessary components to the electronics manufacturing company for a specified period of time in exchange for an agreed price. This contract would be considered private because it involves two private entities and relates to the supply of products for commercial purposes.