Glossary of Terms

Question 1

Apparent Authority or Ostensible Authority

Answer 1

Refers to the person who seems to have been authorized by the principal as an agent to make agreements that must be honored by the principal.

Question 2

Acid Test

Answer 2

Same as quick ratio, includes only those assets in the numerator of the ratio of assets compared with liabilities that can be quickly converted to cash.

Question 3

A.S.T.M

Answer 3

American Society for Testing and Materials, an organization that develops and publishes standard specifications on many products.

Question 4

Bill of Material

Answer 4

A list of items needed, sometimes divided between items to be purchased and items to be assembled or manufactured.

Question 5

Caveat Emptor

Answer 5

Latin for “Buyer Beware”

Question 6

Common Law

Answer 6

The portion of law inherited from the English system and which is based on previous decisions before the court. The most recent decisions and the closest jurisdictions carry more weight than those that are older or more distant.

Question 7

Consideration

Answer 7

Something of value given in return for an agreed performance of a contract.

Question 8

Consequential Damages

Answer 8

Harm or costs which result from some injury other than the harm or cost of the injury itself.

Question 9

Current Ratio

Answer 9

The value of current assets divided by the value of current liabilities. It is an indication of an organization’s ability to meet its current obligations.

Question 10

E.O.Q

Answer 10

Economic Order Quantity a quantity to order based on a formula comparing the holding cost and the rate of usage.

Question 11

F.A.R

Answer 11

Federal Acquisition Regulation

Question 12

F.O.B

Answer 12

Free On Board the named location where title (ownership) of the goods passes from the seller to the buyer.

Question 13

INCOTERMS

Answer 13

International business terms that spell out proper abbreviations and definitions for time of payment, payment discounts, place of ownership, and modes of transportation.

Question 14

Inventory Turns

Answer 14

Inventory turnover ratio calculated by dividing the COGS by the average inventory value.

Question 15

ISO-9000

Answer 15

Established quality standards

Question 16

Letter of Intent

Answer 16

Written statement of the preliminary understanding of parties to an agreement; not a contract.

Question 17

Manufacturers Agent

Answer 17

A non-salaried sales representative usually having a contract with the manufacturer to get a commission on products sold within an agreed area.

Question 18

Meeting of the Minds

Answer 18

In contract law, the agreement to the terms of a contract and an essential part of a contract.

Question 19

Merchantable

Answer 19

A product that is suitable for sale and satisfies the purpose intended.

Question 20

MRO

Answer 20

Maintenance, Repair, and Operating Supplies purchased items not for production or for resale.

Question 21

OEM

Answer 21

Original Equipment Manufacturer manufacturing companies producing products for sale. Suppliers usually offer lower prices when the items will be used in the manufacture of OEM products.

Question 22

Quick Ratio

Answer 22

Compares assets to liabilities. Same as acid test, includes only those assets that can be quickly converted to cash. For example, excludes inventory.

Question 23

RFP

Answer 23

Request for Proposal

Question 24

S.A.E

Answer 24

Society of Automotive Engineers, an organization that establishes its own set of material standards.

Question 25

Tare Weight

Answer 25

The weight of the wrapping or packaging alone.

Question 26

Tender

Answer 26

An offer to perform the terms of the contract.

Question 27

Time is of the Essence

Answer 27

A statement given in a contract or PO that makes the delivery schedule an essential element of the agreement. Failure to deliver on time becomes a breach of the contract.

Question 28

Tort

Answer 28

A private wrong or injury

Question 29

Trade Usage or Usage of Trade

Answer 29

Customary practice in a particular type of business or industry. The meaning of words or language ordinarily associated with a particular type of business or industry.

Question 30

Unconscionable

Answer 30

An unreasonable term, clause, or language of a contract making the agreement one sided.

Question 31

Uniform Commercial Code (UCC)

Answer 31

Similar state laws that establish contract terms for buyers and sellers.