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Take-or-pay contract Definition from Business & Finance Dictionaries & Glossaries
A contract that obligates the purchaser to take any product that is offered (and pay the cash purchase price) or pay a specified amount if he/she refuses to take the product.
Copyright © 2000, Campbell R. Harvey. All Rights Reserved.Take-or-pay contract Definition from Encyclopedia Dictionaries & Glossaries
A take-or-pay contract is a rule structuring negotiations between companies and their suppliers. With this kind of contract, the company either takes the product from the supplier or pays the supplier a . For any product the company takes, they agree to pay the supplier a certain price, say $50 a ton. Furthermore, up to an agreed-upon ceiling, the company has to pay the supplier even for products they do not take. This “penalty” price is lower, say $40 a ton.
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