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CHAPTER 8
GLOSSARY
Administered
price:
Price set by a tenderer in terms of his sales policy or strategy, which
may not be the same as the market price determined by the forces
of supply and demand.
Administrative
lead time:
The time interval between identifying the need to buy and placing
the contract. See also Lead time and Procurement lead time.
Advance
payment:
A payment to a supplier in the case of a major infrastructure or an
industrial project or long-term arrangement, either to enable the
supplier to procure materials for fabrication and to meet his other
costs or in token of the sheer ability of the supplier to exert his selling
power. In either case, such payments would be as per terms and
conditions of contract. Advance payments are to be distinguished
from progress payments, which are related to contract performance.
Normally advance payments are secured by bonds/guarantees
issued by banks on behalf of the supplier. See also Payment,
Progress payments, Bond and Warranty.
Advice of shipment:
Anotice informing the buyer that the goods have been shipped. The
notice usually gives details of packing.
Advice note:
Acommunication sent by the supplier to the buyer informing him that
the goods are ready for dispatch and await forwarding instructions
(in case of ex-works contracts) or shipment instructions (in case of
FOB contracts).
Affreightment:
A contract for the carriage of goods by a carrier. Charter-parties and
Bills of Lading are contracts of affreightment by ship.
Agent:
One appointed or authorised by another to act on his behalf. The
latter is called the principal. In commercial law the agent is appointed
to bring the principal into a legal relationship with third parties.
Aggregation:
Adding together the demand of several buyers for same or similar
goods or services in order to increase purchasing power and obtain
the most advantageous conditions. See also Bulk buying and
Economies of scale.
Agreement:
An affirmation of mutual understanding or assent between two or
more parties. See also Contract and Order.
Airway bill:
A document evidencing a contract of carriage between the shipper
and the carrier (airline) for carriage of goods. It is (a) Evidence of a
contract of carriage; (b) Proof of receipt of goods by the carrier; (c)
Customs declaration; (d) Waybill. Possession and presentation of
an airway bill does not provide a title for the ownership of the goods
shipped. See also Bill of lading and Waybill.