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Life Expectancy
The number of years during
which an asset is expected to remain in
active use.
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LIFO
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Limitation of Cost
A provision that limits the total
costs for which a contractor can be
reimbursed under the terms of a costreimbursement
contract.
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Limited Warranty
A written guarantee with
respect to a product or service that
specifically restricts the conditions under
which that guarantee will be honored.
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Line Function
One of the three identified
functions of a procurement department. This
includes issuing invitations for bids, requests
for proposals, and contracts with suppliers to
obtain the necessary materials and services
in support of entity operations. See also:
Service Function, Staff Function.
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Line Item
An item of supply or service, specified
in an invitation for bids or request for
proposals, for which the bidder or proposer
must offer a separate price.
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Line Item Budget
Fixed budgets with monies
appropriated for a particular period, usually
one year, that can be tied to a specific project
or item and cannot be used for other
purposes.
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Line of Credit
A defined, maximum amount of
money that a borrower may access as needed
and repay immediately or over time with
interest.
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Liquidated Damages
Damages (usually in the
form of money) to be paid by a party who
breaches all or part of a contract with another
party. The amount of damages is agreed upon
by all parties to a contract. These damages
may be applied on a daily basis for as long as
the breach is in effect, but they may not be
imposed as an arbitrary penalty. The key to
establishing liquidated damages is
reasonableness; it is incumbent upon the
buyer to demonstrate, through quantifiable
means, that damages did occur. See also:
Penalty Charge, Damages.
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List Price
The current published price for a good
or service. See also: Administered Price.