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GLOSSARY
OF 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.
- A -
Acceptance
- 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."
- 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
- The amount of property on hand at
any given time;
- 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
- 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.
- 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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