In this video, you will get introduced to a contractual clause known as taking or pay.
#takeorpay #contractualclause #wallstreetmojo #contracts #clauses
Chapters:
00:00 – Introduction
00:42 – What is take or pay?
01:58 – Working of the take or pay clause
02:30 – Example
03:53 – Conclusion
What is take or pay?
The take or pay clause basically stipulates a buyer takes the goods from the seller in exchange for the pre-determined amount. They must pay a fine if they refuse to take the goods.
So what this contractual clause does is that it protects sellers in case the buyer refuses to honor the terms of the contract.
It wouldn’t be fair if the seller spends all the time, money, and effort to get the goods ready, and then the buyer refuses to take delivery, and the seller will have to bear the costs.
(Explained in detail in the video)
Working of the take or pay clause
The take or pay clause basically derives its name from the terms of the contract:
Either take the delivery, or
Pay a fine if you don’t want the delivery
Such clauses are mostly used in contracts in the energy, oil, mineral, natural gas, and coal industries that require significant seller investments.
Example
We have taken a hypothetical example in the video to give you a better understanding of the topic.
So make sure you watch the example part in the video.
This was all about take or pay in this introductory video. Look out for the second part. So don’t forget to subscribe to the channel.
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