Purchasing Terms

 

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Select the first letter of the word from the list above to jump to appropriate section of the glossary.

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Acceptance

  1. A promise to pay, by the drawee of a bill of exchange, usually evidenced by inscribing across the face of the bill "accepted," followed by the date, the place payable, and the acceptor's signature. Any words showing the intention of the drawee to accept or honor the bill are sufficient, however, The effect of the acceptance is to make the bill equivalent to a promissory note, with the acceptor as maker and the drawer as endorser. "bank acceptance."
  2. Receipt by the consignee for a shipment, thus terminating the common carrier liability subject to claim for shortages or damages if such exist.

Acknowledgment A form used by a vendor to advise a purchaser that his order has been received. It usually implies acceptance of the order.

Acquittance A written receipt in full, or discharge from all claims.

Act of God A term used to denote a danger beyond control of avoidance by human power; any accident produced by a physical cause which is irresistible, such as hurricane, flood, lightning, etc. which is in one way connected with negligence.

Ad Valorem Ad valorem is usually applied to a (according to value) customs duty charged upon the value only of goods that are dutiable, irrespective of quality, weight, or other considerations. The ad valorem rates of duty are expressed in percentages of the value of the goods, usually ascertained from the invoice.

Advise of Shipment A notice sent to a purchaser advising that shipment has gone forward and usually containing details of packing, routing, etc.

Affidavit A written statement sworn to before a notary.

Agency The term "agency" signifies relations existing between two parties by which one is authorized to perform or transact certain business for the other; also applies to the office of the agent.

Anticipation An allowance, usually expressed as a percentage, granted for payment of an invoice in advance of the discount or net due date. It is calculated at the stated percentage rate for the number of days between that of actual payment and the due date, and is allowed in addition to any discounts.

Arrival Notice A notice sent by the carrier to the consignee advising of the arrival of a shipment.

Artisan's Lien The lien of a mechanic or other skilled worker in connection with something on which he has bestowed labor or materials, giving him a right to retain possession of it until paid.

As Is A term indicating that goods offered for sale are without warranty or guarantee. The purchaser has no recourse on the vendor for the quality or condition of the goods.

Assignment Transference of some property right or title to another party. This term is frequently used in connection with bills of lading which are endorsed (assigned) over to another party (the assignee) by the owner of the bill (assignor.) Such endorsement gives to the party named the title to the property covered by the bill of lading.

Attachment A legal proceeding accompanying an action in court by which a plaintiff may require a lien on a defendant's property as a security for the payment of any judgment which the plaintiff may obtain.

Authorized A permission to a supplier authorizing the production or delivery on a Deviation restricted basis of items not in conformance with the applicable drawings or specifications.

Average Demurrage An agreement made between a shipper and a transportation line whereby

Agreement the shipper is debited for the time cars are held for loading or unloading beyond a certain period and credited for the time cars are released by him within a certain period, demurrage charges being assessed by the transportation line, usually at the end of the month, for any outstanding debits.

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Back Order That portion of an order which the vendor cannot deliver at the scheduled time and which he has reentered for a shipment at a later date.

Bailee A person into whose possession personal property is delivered.

Bailment The delivery of personal property to another for a special purpose, on condition that the property will be returned pursuant to agreement.

Bailor One who entrusts goods to another.

Bank(er's) An instrument utilized in the financing of foreign trade, making possible Acceptance the payment of cash to an exporter covering all or a part of the amount of a shipment made by him. Such an arrangement originates with the foreign importer who instructs his local bank to provide for a "commercial acceptance credit" with, for example, a New York bank in favor of a named American exporter; the New York bank then issues an acceptance credit, in effect guaranteed by the foreign bank, to the exporter, under the terms of which he may draw a time bill of exchange maturing in 60 or 90 days. Supported by the required evidence of shipment, the bill of exchange is accepted by the bank, by endorsement on the face of the bill, thus signifying that it will pay the bill at maturity. The exporter may retain the bill until maturity or sell it on the so-called "discount market."

Barter The act of exchanging one kind of goods for another, as distinct from trading by the use of money.

Basing Point A particular geographic point to which fixed transportation rates are established to be used for the purpose of constructing rates to adjacent points by adding to, or deducting from, the basing point rate.

Basing Rate A transportation rate on which other rates are constructed or based. For example, the rates from New York to Chicago constitutes the basis on which rates are constructed between western points on the one hand and points in central territory on the other.

Bid An offer, as a price, whether for payment or acceptance. A quotation specifically given to a prospective purchaser upon his request, usually in competition with other vendors. An offer, by a buyer, to a vendor, as at an auction.

Bill A form used by a carrier as an invoice showing consignee, consignor, description of shipment, weight, freight rate, freight charges, and other pertinent information about goods being transported.

Billed Weight The weight on the basis of which charges are assessed by the carrier and shown in freight bill and waybill.

Bill of Entry The detailed statement by the importer of the nature and value of goods entered at the customhouse and used for statistical purposes.

Bill of Exchange An unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a certain sum in money to order or to bearer (Uniform Negotiable Instruments Law); in commercial usage, often synonymous with draft or acceptance. The term is by custom, generally confined to an order to pay money arising out of a foreign transaction, "draft" being the term relating to a domestic transaction.

Bill of Lading Abbreviations: B/L or b/l. A carrier's (Uniform) contract and receipt for goods which it agrees to transport from one place to another and to deliver to a designated person or assigns for compensation and upon such conditions as are stated therein.

The straight bill of lading is a nonnegotiable document and provides that a shipment is to be delivered direct to the party whose name is shown as consignee. The carriers do not require its surrender upon delivery except when necessary that the consignee be identified.

The order bill of lading is negotiable. Its surrender, endorsed by the shipper, is required by the carriers upon delivery, in accordance with the terms thereon. The object of an order bill of lading is to enable a shipper to collect for his shipment before it reaches destination. This is done by sending the original bill of lading, with draft drawn on the consignee, through a bank.

The Bill of Lading drawee, or the one to whom delivery is (Uniform) made, receives the lading upon payment of the draft and surrenders it to the carrier's agent for the shipment of goods. It is customary for shipper, when forwarding goods on this form of lading, to consign the shipment to himself to be delivered only upon his order, designating the person or firm to be notified of its arrival at destination.

A clean bill of lading is one receipted by carrier for merchandise in good condition (no damage, loss, etc., apparent), and which does not bear such notations as "shipper's load and count," etc.

An export bill of lading (through) is one issued by an inland carrier covering contract of carriage from interior point of origin to foreign destination.

A foul bill of lading is one indicating that a damage or shortage existed at the time of shipment.

A government bill of lading is one supplied by the United States government for shipment of government-owned property or of goods being delivered to the government.

An ocean bill of lading is one issued by an ocean carrier for marine transport of goods.

Bill of Materials A list specifying the quantity and character of materials and parts required to produce or assemble a stated quantity of a particular product.

Bill of Sale A written agreement under the terms of which the title or interest in a property is transferred by the seller(s) to the buyer or other designated person(s).

Bill of Sight A customhouse document, allowing consignee to see goods before paying duties. Such inspection is made in the presence of a customs officer and is requested by an importer for the purpose of obtaining details which will enable him to prepare a correct bill of entry. This latter document must be completed within three days of the bill of sight; otherwise goods are removed to government warehouse.

Binder A tentative but binding commitment, as by the owner of real property, or by a fire insurance company. "Earnest Money."

Board An abbreviation for "paperboard." Paperboard is essentially paper, but the term is generally applied to the heavier and thicker grades. The terms "board" and "paperboard" cover substantially the entire range of forms of paper used to manufacture paper containers and cartons.

Bond (performance) A bond executed in connection with a contract and which secures the performance and fulfillment of all the undertakings, covenants, terms, conditions, and agreements contained in the contact.

Bonded Warehouse Place owned by persons approved of by the Secretary of the Treasury, and who have given guarantees or bonds for the strict observance of revenue laws. Such warehouses are used for the storage and custody of import merchandise, subject to duty, until the duties are paid or the goods reshipped without entry.

Bursting Strength The bursting pressure per square inch required to rupture a board sample, as determined by a Mullen or Cady test. Under Rule 41 (freight) and Rule 18 (express), bursting strength must be shown in the boxmaker's certificate.

Buyer's Market A "buyer's market" is considered to exist when goods can easily be secured and when the economic forces of business tend to cause goods to be priced at the purchaser's estimate of value.

Buyer's Option The privilege of buying a commodity, security, merchandise, or other property within a given period of time, usually at a price and under conditions agreed upon in advance of the actual sale. A seller requires a prospective buyer to pay for an option.

Buyer's Right of RoutingWhen the seller does not pay freight charges, buyer has the option of routing. When seller is to prepay freight, the buyer's right to name the carrier must be made a part of the contract of sale; such right to be exercised before actual shipment of goods. If seller disobeys buyer's orders as to carrier or route, he incurs all risks of transportation.

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C & F A term used when goods are to be conveyed by ocean marine transportation and (Cost and Freight) meaning that the price stated includes both the cost of the goods and the transportation charges to the named point of destination. The seller is liable for the ocean freight charges and for all risks and other charges, until he has received a clean ocean bill of lading from the carrier (either a "received for shipment" or an "on-board," as agreed between seller and buyer) at which point title passes to the buyer. The buyer is liable for all risks and charges, except ocean freight, after title has passed. The buyer is responsible for arranging for insurance on the goods from the point of ocean shipment.

Caliper The thickness of a sheet of board, expressed in thousandths of an inch. In the paper box industry, thousandths of an inch are referred to as "points."

Carload A quantity of freight to which carload rates apply, or a shipment tendered as a carload.

C/L or c/l A car loaded to its carrying capacity.

Carload Minimum Weight Abbreviation: C/L min. The least weight at which a shipment is handled at a carload rate.

Carload Rate The rate applying to a carload quantity of freight.

Carton This term is usually applied to the interior package commonly used to enclose cereals, dried fruit, sugar, soap, etc. A carton is not normally a shipping container and is not intended by itself to meet shipping requirements and regulations.

Cash in Advance Same as "cash with order."

Cash on Delivery Abbreviation: C.O.D. Payment due and payable upon delivery of goods.

Cash with Order Payment accompanies order when given to seller.

Caveat Emptor "Let the buyer beware" - the purchase is at the buyer's risk.

Caveat Venditor "Let the seller beware" - the seller, in some situations, is liable to the buyer if the goods delivered are different in kind, quality, use, and purpose from those described in the contract of sale.

Certificate of Compliance A supplier's certification to the effect that the supplier or services in question meet certain specified requirements.

Certificate of Damage A document issued by dock companies in regard to merchandise received or unloaded in a damaged condition.

Certificate of OriginA certified document as to the origin of goods.

Certificate of WeightAn authoritative statement of the weight of a shipment.

Certified Bill of Lading An ocean bill of lading certified by a consular officer to meet certain requirements of hiscountry as to goods imported.

Certified Check A check drawn on a bank and accepted by it.

Change Order The purchaser's document used to amend a purchase transaction previously formalized by a purchase order.

Chattel The word "chattel" is derived from the word "cattle." It is a very broad term and includes every kind of property that is not real property.

Check A check is a bill of exchange or draft drawn on a bank and payable on demand.

C.I.F. Similar to C & F except that the cost of ocean marine insurance is also for the account of (Cost, Insurance, and the seller. "War risk" insurance is not for the seller's account unless otherwise Freight) agreed upon between the parties.

Classification of Purchasers Purchasers are classified by vendors into categories and often are given prices or discounts established by the vendor for such classification. Typical classifications are ultimate consumer, retailer, wholesaler, distributor, and original equipment manufacturer.

Collateral Security placed with a creditor to assure performance of an obligation.

Commercial Law That branch of the law used to designate the rules that determine the rights and duties of persons engaged in trade and commerce.

Commodity Rate A rate applicable to an article described or named in the tariff containing the rate, and which applies to, from, or between specific points.

Common Carrier A person or corporation, licensed by an authorized state, Federal, or other governmental agency, engaged in the business of transporting personal property from one place to another for compensation. A common carrier is bound to carry for all who tender their goods and the price for transportation.

Common Law Law based on precedent expressed in judicial decisions, from the early days down to the present in this county.

Competitive Bidding The offer of estimates by individuals or firms competing for contract, privilege, or right to supply specified services or merchandise.

Composition of Creditors An agreement among creditors and with their debtor by which they agree to take a lesser amount in complete satisfaction of the total debt due.

Compromise An agreement between two or more persons, to settle the matters of a controversy without resort to litigation.

Condemnation Proceedings An action or proceeding in court for the purpose of taking private property for public use.

Conditional Sale A sale in which title is retained by a vendor as security for the purchase price, although possession is surrendered by the buyer.

Confirming Order A purchase order issued to a vendor, listing the goods or services and terms of an order placed verbally, or otherwise, in advance of the issuance of the usual purchase document.

Consideration Something of value given for a promise to make the promise binding. ("Binder," "earnest money.")

Consignee The person or organization to whom a shipper directs the carrier to deliver goods. Such person or organization is generally the buyer of goods and is called a consignee on a bill of lading.

Consignment Goods shipped for future sale or other purpose, title remaining with the shipper (Consignor), for which the receiver (Consignee), upon his acceptance, is accountable. Consigned goods are a part of the consignor's inventory until sold. The consignee may be the eventual purchaser, may act as the agent through whom the sale is effected, or may otherwise dispose of the goods in accordance with his agreement with the consignor.

Consignor The person or organization who delivers freight to a carrier for shipment is called a consignor or shipper and is the one who directs the bill of lading to be executed by the carrier. Such a person or organization may be the consignor- consignee, if the bill of lading is made to his own order.

Constructive Delivery Although physical delivery of personal property has not occurred, yet by the conduct of the parties, it may be inferred that as between them possession and title has passed.

Container An item in which or around which another item or items are kept and maintained as an entity, mainly for shipping or issue purposes. Examples: barrel, bottle, can, drum, reel, spool.

Continuing Guaranty An undertaking by one person to another person to answer from time to time for money to be loaned or goods to be sold to a third person. The term refers to the future liability of the principal for a series of future transactions.

Contract A deliberate agreement between two or more competent persons to perform or not to perform a specific act or acts. A contract may be verbal or written. A purchase order, when accepted by a vendor, becomes a contract. Acceptance may be either in writing or be performance, unless the purchase order requires acceptance thereof to be in writing, in which case it must be thus accepted. A unilateral contract is one where only one party promises performance, the performance being in exchange for an act by the other. A bilateral contract is one where both parties promise, each promise being given in exchange for the other.

Contract Carrier By motor vehicle, any person or corporation, not a common carrier, who under special and individual contracts or agreements, transports passengers or property by motor vehicle for compensation.

Contract Date The date when a contract is accepted by all parties thereto.

Contractor 1) Any one of the parties to a contract. 2) One who contracts to perform work or furnish materials in accordance with a contract.

Conveyance The equipment in which goods are transported by a carrier, such as a railroad, car, truck, vessel, barge, airplane, etc.

Conveyor A generic term for a class of materials-handling devices used to move things over a fixed line of travel.

Corporation A collection of individuals created by statute as a legal person, vested with powers and capacity to contract, own, control, convey property, and transact business within the limits of the powers granted.

Cost-Plus A pricing method whereby the purchaser agrees to pay the vendor an amount determined by the costs incurred by the vendor to produce the goods and/or services purchased and to which costs are added at a stated percentage or fixed sum.

Counteroffer An offer to enter into a transaction on terms differing from those first proposed. It should be noted that vendors' "acknowledgment forms" given to a purchaser in response to a purchase order may be, in fact, a counteroffer.

Covenant A promise in writing under seal. It is often used as a substitute for the word contract.

Currency Lawful money in current circulation. The terms "currency" and "current funds" now seem to include not only coin, silver, United States notes, and treasury notes, but also silver certificates, Federal Reserve notes, and national bank notes.

Cwt. See "hundredweight".

Cylinder One of two principal types of board machines or board produced on a cylinder machine. The other principal type is "fourdrinier."

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Damages Compensation, usually in money, for injury to goods, person, or property.

Dating A method of granting extended credit terms used by sellers to induce buyers to receive goods in advance of their required delivery date, thus permitting the seller to ship goods earlier than the buyer would ordinarily wish to receive them. An example of dating would be for a purchase of spring-season goods shipped in the winter, by a manufacturer whose normal selling terms were 2 percent discount for payment in 10 days from date of invoice of December 30, the terms would be stated: "2 percent 10 days, net 30 days as of March 15." "Dating" may be extended on open account or on a secured account by use of a time draft or other instrument.

Debt Any obligation to pay money. Ordinarily the term debt means a sum of money due by reason of a contract expressed or implied. Broadly, the word may include obligations other than to pay money, such as the duty to render services or deliver goods.

Declared Valuation The valuation placed on a shipment when it is delivered to the carrier.

Deed A written instrument in a special form that is used to pass the legal title of real property from one person to another. See "conveyance." In order that the public may know about the title to real property, deeds are recorded in the deed record office of the county or town where the land is situated.

Delivery The transfer of possession; as applied to shipping, it occurs when lading is surrendered and title to goods passes to the receiver or consignee.

Delivery Schedule The required or agreed time or rate of delivery of goods or services purchased for a future period.

Demurrage A charge, allowed in tariffs, or by contract, assessed against a consignor, consignee, or other responsible person for delays to transportation equipment in excess of "free time" for loading, unloading, reconsigning, or stopping in transit.

Demurrage Agreement An agreement between a carrier and a consignor (or consignee) whereby delays in excess of the allowed free time provided in tariffs, are debited against the consignor (or consignee), and delays less than those allowed are credited to the consignor (or consignee). In rail- carrier demurrage agreements, charges are assessed by the carrier on the net debits on a periodic basis, usually at the end of a month.

Deposition The written testimony of a witness taken in proper form.

Depreciation Decline in value of a capital asset through wear and tear, age, inadequacy, and obsolescence without loss of substance.

Destination The place to which a shipment in consigned.

Discount An allowance or deduction granted by the seller to the buyer, usually when certain stipulated conditions are met by the buyer, which reduces the cost of the goods purchased. However, discounts may be granted by the seller without reference to stipulated conditions. An example of such use of discount is the application of discount to a nominal or "list" price to establish the "net" or actual price.

An arbitrary discount is one agreed upon between vendor and purchaser which has no relation to the vendor's usual basis for discount.

A broken package discount is one applying on a quantity of goods less than the quantity contained in a vendor's regular package.

A cash discount is an allowance extended to encourage payment of invoice on or before a stated date which is earlier than the NET date. The percent of discount allowed is as agreed between buyer and seller and is often established by industry or trade custom. Usual discounts are 1/2, 1, or 2 percent with occasional discount allowances to 10 percent. Typical cash discount terms are shown below:

1/2 percent 10 days: 1/2 percent discount allowed if paid on or before the 10th day.

1 percent e.o.m.: 1 percent discount allowed if paid on or before the end of the month.

2 percent e.o.m. - 10: 2 percent discount allowed if paid on or before the 10th of the following month.

2 percent 1-60X or 2 percent 10-60 extra: 2 percent discount allowed if paid on or before the 70th day.

2 percent 10th prox.: same as 2 percent e.o.m. 10.

2 percent 10th & 25th or 2 percent 25th & 10: 2 percent discount allowed for payment on or before the 25th of the month for billings of the first half of the month; 2 percent discount allowed for payment on or before the 10th of the succeeding month for billings of the last half of the month.

Note: Discount payment dates, other than with e.o.m. or prox. terms, are interpreted in various ways. The usual interpretation is that the discount date is calculated from the invoice date. Other interpretations should be specifically agreed upon between the buyer and seller. Other interpretations are based on a) the date goods are shipped, b) the date goods are received by the buyer, and c) the date the goods are inspected and found acceptable by the buyer.

Discount payment terms usually are stated in conjunction with a net term. Typical are:

1 percent 10 days, net 30 or 1-10-30

2 percent 10 days, net 60 or 2-10-60

2 percent 10 days 60 extra, net 90 or

2-10-60X net 90

2 percent 30 net 31

Where the net date is not stated in conjunction with a discount date, the presumption is that the invoice is due net the day following the discount date.

Net terms require that vendors' invoices be paid without discount on or before due date. Typical statements of net terms are:

Net: payment due immediately.

Net 10 days: due on or before the tenth day.

Net e.o.m.: due on or before the end of the month.

Net e.o.m. 10. net 10 e.o.m. or net 10th prox: due on or before the 10th of the month following.

Net 10-60X or net 10-60 extra: due on or before the 70th day.

Net 10th & 25th or net 25th & 10th: payment due on the 25th of the month for billings of the first half month; due on the 10th of the following month for billings of the last half of the month.

A chain discount is a series of discounts, the percent of each discount in the chain applying to the amount resulting from application of the immediately preceding percent of discount. A chain discount can be reduced to a single discount by multiplying the complement of each of the discounts and determining the complement of the result. For example:

The single discount figure equal to the chain discount 30% + 20% + 10% = 49.6% and is calculated as follows: 70 x 80 x 90 = 50.4 whose complement is 49.6%.

A quantity discount is an allowance determined by the quantity or value of a purchase.

A standard package discount is one applying to goods supplied in the vendor's regular package.

A trade discount is a deduction from an established price for items or services, often varying in percentage with volume of transactions, made by the seller to those engaged in certain businesses and allowed irrespective of the time when payment is made.

Discount Schedule The list of discounts applying to varying quantities of goods or applicable to differing classifications of purchasers.

Draft A written order drawn by one party (drawer) ordering a second party (drawee) to pay a specified sum of money to a third party (payee).

An arrival draft is prepared by the seller and, with invoice and shipping receipt for the goods sold, is deposited at his bank for collection. The bank forwards the documents to its correspondent bank at the buyer's city. The buyer secures the invoice and shipping receipt from the bank upon payment or acceptance of the draft, usually at the time the goods have arrived at destination.

A sight draft is payable upon presentation to the drawee (as distinguished from an arrival or time draft).

A time draft is one which is payable a stated time after acceptance by the drawee.

Drawback A refund of customs duties paid on material imported and later exported.

Due Care The words express that standard of conduct which is exercised by an ordinary, reasonable, prudent person.

Duty A tax levied by a government on the importation, exportation, or use and consumption of goods.

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Earnest " Earnest Money" is a term used to describe money that one contracting party gives to another at the time of entering into the contract in order to "bind the bargain" and which will be forfeited by the donor if he fails to carry out the contract. Generally, in real estate contracts, such money is used as part payment of the purchase price. "binder."

Easement An easement is an interest in land - a right that one person has to some profit, benefit, or use in or over the land of another. Such right is created by a deed, or it may be acquired by description (the continued use of another's land for a statutory period).

Embargo An order issued by a carrier, carriers or their agent, or by a government, prohibiting the acceptance of freight, in any kind or of a specific nature, for shipment; generally applying to certain areas, or to and from particular points, and resulting from congestion, labor troubles, etc.; in marine usage, a detention of vessels in port; a prohibition from sailing.

En Route On the way; transit.

Escalation An amount or percent by which a contract price may be adjusted if specified contingencies occur, such as changes in the vendor's raw material or labor costs.

Escrow An agreement under which a grantor, promisor, or obligor places a sum of money or the instrument upon which he is bound with a third person, called escrow holder, until the performance of a condition or the happening of an event stated in the agreement permits the escrow holder to make delivery of the money or instrument to the grantee, promisee, or obligee.

Expedite To hasten or to assure delivery of goods purchased in accordance with a time schedule, usually by contract by the purchaser with the vendor.

Express Warranty When a seller makes some positive representation concerning the nature, quality, character, use, and purpose of goods, which induces the buyer to buy and the seller intends the buyer to rely thereon, the seller has made an express warranty.

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Factor A factor is an agent for the sale of merchandise. He may hold possession of the goods in his own name or in the name of his principal. He is authorized to sell and to receive payment for the goods.

Fair Market Value The value of an item as determined by negotiation between buyers and sellers and which value would be acceptable as a basis of a purchase and sale.

F.A.S. (Free Alongside Ship) The term f.a.s. must be qualified by a named port. The seller is liable for all charges and risks until the goods sold are delivered alongside a vessel at such port or are delivered to the port on a dock which will by used by the vessel. Title passes to the buyer when the seller has secured a clean dock or ship's receipt for the goods.

FIFO First in, first out; as lifo except the first put in is taken out first instead of the last in.

Finder A person who acts to bring together a purchaser and a vendor and who is not in the employ of either. A finder usually is paid a fee by the party engaging his service.

Firm Offer A definite proposal to sell something on stated terms, such offer binding the proposer up to stipulated time of expiration. A "firm bid" is a similar proposal to buy something. Although both are referred to colloquially as "firm offers," the distinction between bids and offers is usually preserved in cable codes.

Floor-Load Capacity A general term given for a particular location in a building, the maximum weight that the floor can safely support, expressed in pounds per square foot.

FOB (Free on Board) The term means the seller is required to place the goods aboard the equipment of the transporting carrier without cost to the buyer. The term "f.o.b." must be qualified by a name of location, such as shipping point, destination; name of a city, mill, warehouse, etc. The stated f.o.b. point is usually the location where title to the goods passes from the seller to the buyer. The seller is liable for transportation charges and the risks of loss or damage to the goods up to the point where title passes to the buyer. The buyer is liable for such charges and risks after passing of title.

FOR (Free on Rail) A term meaning that seller will make delivery as far as the railroad terminal named, or in case of overseas shipment, in harbor at port of departure, name of port stated. To avoid misunderstanding, since the term is often considered to be the equivalent of "F.O.B. vessel," or "F.A.S. vessel," the phrase is amplified further, "f.o.r., cartage to vessel extra."

Fourdrinier One of the two principal types of paper machines or board machines, the other type being "cylinder."

Free Goods Goods not subject to duty.

Free Port A restricted area at a seaport for the handling of duty exempted import goods, a "foreign trade zone."

Freight at Destination An expression meaning that freight charges will be paid by the consignee of goods upon their arrival at a specified destination.

Futures Contracts for the sale and delivery of commodities at a future time, made with the intention that no commodity be delivered or received immediately.

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Good Title A title free from encumbrances such as mortgages and liens.

Grain Paper or paperboard, as made on modern high-speed machines, has grain, which is roughly comparable to the grain of wood. In the formation of the sheet on the machine, the individual fibers tend to be aligned in machine direction more than in cross-machine direction, thus producing grain in machine direction. This neither is always good nor always bad.

Gross Negligence The want of even slight care. "Due care."

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Hedge Any purchase or sales transaction having as its purpose the elimination of profit or loss arising from price fluctuations; specifically, a purchase or sale entered into for the purpose of balancing, a sale or purchase already made, or under contract, in order to offset the effect of price fluctuation.

Holder in Due Course A person who takes a negotiable instrument under the following conditions: (1) that it is complete and regular on its face; (2) that he becomes the holder of it before it was overdue and without notice that it had been previously dishonored, if such was the fact; (3) that he took it in good faith and for value; (4) that at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it.

Hundredweight In the United States measurement and in domestic rail freight, 100lb; in English measurement and in ocean freight parlance a hundredweight, or "cwt," is 112lb., or one-twentieth of a long ton of 2,240lb. Care should be taken in the use of this phrase to avoid confusion as to the exact meaning.

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Import To receive goods from a foreign country.

Importer A buyer or merchant who imports goods.

In Bond The storage or transport of goods in the custody of a warehouse or carrier from whom the goods can be taken only upon payment of taxes or duties to a government agency.

Independent Contractor The following elements are essential to establish the relation of independent contractor in contradistinction to principal and agent. An independent contractor must: 1) exercise his independent judgment as to the means used to accomplish the results; 2) be free from control or orders from any other person; 3) be responsible only under his contract for the result obtained.

Indorsement Writing one's name upon paper for the purpose of transferring the title. When a payee of a negotiable instrument, such writing is an indorsement.

Installment Payments A schedule of payment arranged in connection with a purchase transaction requiring periodic payment of a specific sum for each of a stated number of payments. The first payment is usually at the time of delivery of the purchase or soon thereafter. Installment payment terms may be either on an open-account basis or on a secured-account basis. Secured installment accounts are usually evidenced by a mortgage or a series of promissory notes or time drafts.

Inventory

  1. The amount of property on hand at any given time;
  2. an itemized listing of amounts of property indicated as on hand at a particular time. A "physical inventory" is one determined by actual physical count of the items. A "book inventory" is one determined from records maintained in connection with day-to-day business activities.

Invitation for A request, verbal or written, which is made to prospective suppliers for their quotation Bids on goods or services desires by the prospective purchaser.

Invoice A document showing the character, quantity, price, terms, nature of delivery, and other particulars of goods sold or of services rendered; a bill.

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Jobber A middleman or dealer who purchases goods or commodities from manufacturers or importers and sells them to retailers. Also called dealer or wholesale merchant.

Joint Adventure Sometimes "joint venture." When two persons enter into a single enterprise for their mutual benefit without the intention of continuous pursuit, they have entered a joint adventure. They are essentially partners.

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K.D. (Knocked Down) An abbreviation meaning that the article described is supplied unassembled. When an article is shipped "k.d.," it must be reduced in size by one-third or as specified in the carrier's tariff, to secure the applicable freight rate.

Kraft The term "kraft" is synonymous with sulfate and refers to the paper pulping process. It is made from virgin pulp, coming directly from wood.

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Landed Price A price which includes the cost of the goods, transportation, and other costs incident to ultimate delivery to the location specified by the purchaser.

Lead Time The period of time from date of ordering to the date of delivery which the buyer must reasonably allow the vendor to prepare goods for shipment.

Lease A contract conveying from one person (lessee) to another (lessor) real estate or personal property for a term in return for a specified rent or other compensation.

Legal Tender Currency or coin which a government has declared shall be received in payment of duties or debts.

Less-Than-Carloads Abbreviation: l.c.l. A quantity of freight which is less than the amount necessary to constitute a carload.

Less-Than-Carload A rate applicable to less than a carload shipment.

Less-Than-Truckload Abbreviation: LTL. A quantity of freight which is less than the amount necessary to constitute a truckload.

Less-Than-Truckload A rate applicable to less than a truckload shipment.

Letter of Credit A letter containing a request that the party to whom it is addressed pay the bearer or person named therein money, sell him commodities on credit, or give him something of value, with the intention that the addressee later seek payment from the writer of the letter. It is used by a buyer to secure goods without the necessity of having cash on hand.

Letter of Intent A preliminary contractual arrangement customarily used in situations where the items, quantities, price, and delivery dates are known, but where the principal contract provisions required additional time-consuming negotiations. It is used to enter into interim agreement, pending a definitive contract, so as to permit the start of construction, production, or delivery of the supplies or materials.

Lien A right one person, usually a creditor, has to keep possession of or control the property of another for the purpose of satisfying a debt.

LIFO Last in, first out; referring to accounting, handling, and pricing of materials held in inventories.

Liquidated Damages The parties to a contract may provide in advance that a specific sum be recoverable if the contract is breached. If the amount specified is reasonable and if the nature of the contract is such that actual damages would be difficult to determine, liquidated damage provisions are enforced. If the amount specified is unreasonably great in relation to the loss or injury suffered, or if the amount of damages could be determined easily in the event of breach, the courts declare the provision to be a penalty and refuse to enforce it.

Lump Sum The price agreed upon between vendor and purchaser for a group of items without breakdown of individual values; a lot price.

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Marketable Title A title of such character that no apprehension as to its validity would occur to the mind of a reasonable and intelligent person.

Mechanic's Lien A mechanic's lien is created by statute to secure laborers for their wages. Such lien has for its purpose to subject the land of an owner to a lien for material and labor expended in the construction of buildings, which buildings having been placed on the land become a part thereof by the law of accession.

Mortgage A lien on land, buildings, machinery, equipment, or other fixed or movable property, given by a buyer to the seller as security for payment of the purchase or given to the lender by the borrower as security for a loan.

A real estate mortgage applies to lands and buildings.

A chattel mortgage applies to all other types of property.

Mullen Test A test of the pressure required to puncture a paper sample under specific conditions, as indicated on a piece of testing equipment known as a Mullen tester. The Mullen test is a requirement in connection with various shipping regulations.

Mutual Assent In every contract each party must agree to the same thing. Each must know what the other intends; they must mutually assent to be in agreement.

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Negligence The failure to do that which an ordinary, reasonable, prudent man would do, or the doing of some act which an ordinary, prudent man would not do. Reference must always be made to the situation, the circumstances, and the knowledge of the parties.

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Open-Account Purchase A purchase made by a buyer who has established credit with the seller. Payment terms are usually stated to require payment of invoice on or before a specific date or dates; also, to require payment of invoice in full, or less a certain percentage for prompt payment. Such terms are agreed upon between buyer and seller at time of placing order, or before.

Open-to-Buy A term used in retailing to designate the value or quantity of goods beyond which a buyer may not purchase; the value or quantity remaining to be purchased against a specific appropriation or requisition.

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Packaging The use of wrappings, cushioning materials, containers, markings, and related techniques to protect items from deterioration, to prevent loss or damage, to facilitate handling, and to identify the item packaged. Packaging does not include that additional processing which may be required to prepare the packaged item for shipment.

Packing The preparation of an item for shipment or storage; includes required bracing, cushioning, wrapping, strapping, placement in shipping container, and marking.

Packing List A document which itemizes in detail the contents of a particular package or shipment.

Pledge The deposit or placing of personal property as security for a debt or other obligation with a person called the pledgee. The pledgee has implied power to sell the property if the debt is not paid. If the debt is paid, the right to possession returns to the pledgor.

Point of Origin The station at which a shipment is received by a transportation line from the shipper.

Prepaid A term denoting that transportation charges have been or are to be paid at the point of shipment.

Price Maintenance The price of an item established by a manufacturer or wholesaler below which he will not sell or permit his product to be sold by others.

Price Prevailing at Date of Shipment An agreement between the purchaser and the vendor that the price of the goods ordered is subject to change at the vendor's discretion between the date the order is placed and the date the vendor makes shipment and that the then established price is the contract price.

Price Protection An agreement by a vendor with a purchaser to grant the purchaser any reduction in price which the vendor may establish on his goods prior to shipment of the purchaser's order. Price protection is sometimes extended for an additional period beyond the date of shipment.

Price Schedule The list of prices applying to varying quantities or kinds of goods.

Proforma Invoice An invoice prepared by a vendor in advance of a sale to show the form and amount of the invoice which will be rendered to the purchaser if the sale is consummated. Proforma invoices are often used in export transactions to support the purchaser's request to governmental authorities for import permits and foreign exchange.

Progress Payments Payments arranged in connection with purchase transactions requiring periodic payments in advance of delivery for certain stated amounts or for certain percentages of the purchase price. The whole of the purchase price may be due in advance of delivery or partially in advance and partially after delivery. Progress payments are usually required in contracts for building construction and often for specially designed plant machinery and equipment. Purchases calling for progress payments may be either on open account or be secured, usually by a contract between the buyer and seller.

Promissory Note An unconditional written promise, signed by the maker, to pay a certain sum in money, on demand or at a fixed or determinable future date, either to the bearer or to the order of a designated person.

Pro-Number In freight offices, records of shipments are kept and agents' numbers are placed on freight bills, with the prefix pro- (derived from the word "progressive"), so that a specific consignment may be referred to instantly.

Purchase To procure property or services for a price; includes obtaining by barter.

Purchase Order The purchaser's document used to formalize a purchase transaction with a vendor. A purchase order, when given to a vendor, should contain statements as to the quantity, description, and price of the goods or services ordered; agreed terms as to payment, discounts, date of performance, transportation terms, and all other agreements pertinent to the purchase and its execution by the vendor.

Purchase Requisition A form used to request the purchasing department to procure goods or services from vendors. "Traveling purchase requisition."

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Quotation A statement of price, terms of sale, and description of goods or services offered by a vendor to a prospective purchaser; a bid. When given in response to an inquired is usually considered an offer to sell. Also, the stating of the current price of a commodity; the price so stated.

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Rate As applied to transportation or the movement and handling of goods and persons, the cost of, or charge for, service to be or which has been rendered.

Rebate A sum of money returned by the vendor to a purchaser in consideration of the purchase of a stipulated quantity or value of goods, usually within a stated period.

Receiving Report A form used by the receiving function of a company to inform others of the receipt of goods purchased. Usually, copies are distributed to the purchasing and accounting departments and the storerooms.

Retention The practice of withholding a portion of the sum due a vendor until the purchase has been finally accepted as fully meeting specifications. The amount or percentage withheld is agreed between the parties at the time of purchase as is the period of retention.

Royalty Compensation for the use of land, equipment, or process payable to the owner, vendor, or lessor. Royalty payments are usually calculated as a percent of income derived by the user from the property or process, as a stated sum per unit produced therefrom, or, a stated sum per period, such as a month or a year.

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Sales Tax A tax imposed specifically on a sale made by a vendor.

Salvage

  1. Property that has some value in addition to its value as scrap, but which is no longer useful as a unit in its present condition and whose restoration to usefulness as a unit is economically not practicable.
  2. The act of saving or recovering condemned, discarded, or abandoned property in order to obtain useful parts and scrap therefrom.

Sample A small portion of merchandise taken as a specimen of quality.

Scrap Material that has no value except for its basic material content.

Seller's Lien The right of a seller to retain possession of goods until the price is paid. Such right does not exist where goods are sold on credit.

Seller's Market A seller's market is considered to exist when goods cannot easily be secured and when the economic forces of business tend to cause goods to be priced at the vendor's estimate of value.

Seller's Option The right of a seller to require the buyer to purchase merchandise, or other property at an agreed price and within a given period of time.

Short Sale The sale of a commodity for future delivery which the seller does not possess but intends to purchase prior to the required delivery date, expecting that the market price will be no higher or will decline during the intervening period.

Specification A clear, complete, and accurate statement of the technical requirements descriptive of a material, an item, or a service, and of the procedure to be followed to determine if the requirements are met.

Stock A supply of goods maintained on hand at the storage points in a supply system to meet demands that it is anticipated will be made.

S.U. Setup. An abbreviation meaning that the article described is supplied fully assembled.

Subcontractor A party who contracts with a prime contractor to perform all or any part of the prime contractor's obligations in a particular prime contract.

Subrogation The substitution of one person in another's place, whether as a creditor or as the possessor of any lawful right, so that the substituted person may succeed to the rights, remedies, or proceeds of the claim.

Surrender The abandonment of leased premises by a tenant. If a landlord accepts the abandonment as a termination of the lease, a surrender has occurred.

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Terms of Payment All purchase transactions require a payment for the goods or services received and, excepting an unusual exchange or barter deal, payment is made in negotiable funds in accordance with the terms agreed between buyer and seller. There are three basic payment terms: cash, open account, and secured account.

Trade Acceptance A noninterest bearing bill of exchange or draft covering the sale of goods, drawn by the seller on, and accepted by, the buyer. Its purpose is to put into negotiable form an open account having a short maturity. To be eligible for discount it must contain the statement that the acceptor's obligation arises out of the purchase of goods from the drawer and it may be accompanied by a record of purchase.

Trade Terms The broad classification applicable to purchase transactions with reference to understandings between buyer and seller, either as to the meanings or certain abbreviations, words, or phrases, or to customs applicable to transactions as established by agreement between the parties or as established by general usage. "Trade terms" includes agreed or arbitrary classifications of buyers and sellers, or their agents; types and methods of discounts, delivery terms, allowances; practices peculiar to an industry, etc.

Trademark No complete definition can be given for a trademark. Generally it is any sign, mark, symbol, work, or arrangement of words in the form of a label adopted and used by a manufacturer or distributor to designate his particular goods, and which no other person has the legal right to use. Originally, the design or trademark indicated origin, but today it is used more as an advertising mechanism.

Traveling Purchase Requisition A purchase requisition designed for repetitive use. After a purchase order has been prepared for the goods requisitioned, the form is returned to the originator who holds it until a repurchase of the goods is required. The name is derived from the repetitive travel between the originating and purchasing departments.

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Vendee A purchaser of property. The term is generally applied to the purchaser of real property. The word "buyer" is usually applied to the purchaser of personal property.

Vendor One who sells something; a "seller."

Vendor's Lien An unpaid seller's right to hold possession of property until he has recovered the purchase price.

Visual Inspection A term generally used to indicate inspection performed without the aid of test instruments.

Voucher A written instrument that bears witness or "vouches" for something. Generally a voucher is an instrument showing services have been performed, or goods purchased, and authorizes payment to be made to the vendor.

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Warranty An undertaking, either expressed or implied, that a certain fact regarding the subject matter of a contract is presently true or will be true. The word should be distinguished from "guaranty" which means a contract or promise by one person to answer for the performance of another.

Waybill A document prepared by a transportation line at the point of origin of a shipment, showing the point of origin, destination, route, consignor, consignee, description of shipment and amount charged for the transportation service, and forwarded to the carrier's agent at transfer point or destination.

An astray waybill is used for freight miscarried or separated from its proper waybill.

A blanket waybill is one covering two or more consignments of freight.

An interline waybill is one covering the movement of freight over two or more transportation lines.

Weight, Gross The weight of an article together with the weight of its container and the material used for packing.

Weight, Net The actual weight of the contents of a container or of the cargo of a vehicle. It is the total weight less the tare weight.

Weight, Tare The weight of an empty container and the other material used for packing its contents. Actual tare is determined when each cask, bag, etc. is weighed; average tare, when one is weighed as a sample; and estimated tare, when a fixed percentage is allowed.

Wholesaler A purchaser who acquires goods for resale to a retailer or a jobber.
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