Dictionary of Procurement Terms

A contract for future supply of definite quantities of supplies or services. See also: Futures, Spot Price.

The purchasing of supplies and materials in quantities exceeding immediate needs, often in anticipation of a price increase, strike threat, or future supply disruption.

A business model in which a company or government (franchisor) grants a license to a group or an individual (franchisee) authorizing them to legally start a business for a specified commercial activity or to act as their agent.

An intentional concealment, omission, or perversion of truth for the purpose of inducing someone to rely upon it and part with something of value or surrender a legal right. The three necessary elements of a cause of action for fraud are: 1) false representation of a present or past fact on the part of the defendant, 2) a plaintiff’s action in reliance upon that misrepresentation, and 3) damage resulting to the plaintiff from the action that was based on the misrepresentation. (Black’s Law Dictionary 1990)

A price that includes the cost of transportation and delivery to the side of the vessel, within reach of its loading tackle, at the specified port of shipment, with the buyer’s liability beginning at that point.

A shipment misrouted or unloaded at a wrong destination that is forwarded to the correct destination free of extra charges.

An economy in which prices, goods, and services are determined by the market rather than the government.

The point at which a title changes hands from the supplier to the buyer at the destination of the shipment when the buyer signs for the goods. The supplier owns the goods in transit, assumes responsibility for carrier selection, and files any claims for damages incurred during this period. F.O.B. destination does not address the responsibility for the cost of transportation (freight charges), which must be specified with the inclusion of additional language.

The point at which a title passes at destination and the buyer pays the freight.