Take or Pay

AAA

DEFINITION of 'Take or Pay'

A provision, written into a contract, whereby one party has the obligation of either taking delivery of goods or paying a specified amount.

INVESTOPEDIA EXPLAINS 'Take or Pay'

This is used in some contracts as a method to ensure that the transaction occurs. For example, a Banana farmer will enter into a take or pay contract with a fruit retailer so that the retailer will buy all the bananas from the farmer or pay a provision for not buying them.

RELATED TERMS
  1. Whoops

    Slang for the Washington Public Power Supply System (WPPSS), ...
  2. Municipal Bond

    A debt security issued by a state, municipality or county to ...
  3. Obligation

    The legal responsibility to meet the terms of a contract. If ...
  4. Copyright Infringement

    The use or production of copyright protected material without ...
  5. ISDA Master Agreement

    A standard agreement used in over-the-counter derivatives transactions.
  6. Contingency Clause

    A contract provision that requires a specific event or action ...
Related Articles
  1. A Review Of Past Recessions
    Insurance

    A Review Of Past Recessions

  2. The Barnyard Basics Of Derivatives
    Investing Basics

    The Barnyard Basics Of Derivatives

  3. How To Invest In Commodities
    Investing Basics

    How To Invest In Commodities

  4. An Introduction To Managed Futures
    Options & Futures

    An Introduction To Managed Futures

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center