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Notes On Method of Payment Under Different Types of Contracts.

Payment under contracts typically occurs upon completion, though deposits may be required upfront. It can be made in various forms like cash, check or wire transfer as agreed by parties. If payment is not made, the seller may sue for breach of contract. Different contract types include fixed-price, where a specific product/service is provided for a set price; time and materials based on hourly rates and material costs; unit price with a fixed cost per unit; and cost-plus reimbursing costs plus profit margin. Examples given are construction as typically fixed-price paid in installments; software development as time and materials paid in installments; and services like IT support as fixed-price or time and materials paid monthly. The specific payment

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71 views

Notes On Method of Payment Under Different Types of Contracts.

Payment under contracts typically occurs upon completion, though deposits may be required upfront. It can be made in various forms like cash, check or wire transfer as agreed by parties. If payment is not made, the seller may sue for breach of contract. Different contract types include fixed-price, where a specific product/service is provided for a set price; time and materials based on hourly rates and material costs; unit price with a fixed cost per unit; and cost-plus reimbursing costs plus profit margin. Examples given are construction as typically fixed-price paid in installments; software development as time and materials paid in installments; and services like IT support as fixed-price or time and materials paid monthly. The specific payment

Uploaded by

Sedrick Ndofor
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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The method of payment under different types of contracts varies depending on the type of

contract and the specific terms agreed upon by the parties. However, there are some general
principles that apply to most contracts.

General principles

● Payment is typically due upon completion of the contract. This means that the buyer
does not have to pay the seller until the seller has fulfilled all of their obligations under the
contract.
● Payment can be made in a variety of ways, such as cash, check, wire transfer, or
credit card. The specific method of payment should be agreed upon by the parties before
the contract is signed.
● If the buyer fails to make payment, the seller may have the right to sue the buyer for
breach of contract.

Different types of contracts

Fixed-price contracts: Under a fixed-price contract, the seller agrees to provide a specific
product or service for a specific price. Payment is typically due upon completion of the contract,
but the seller may require a deposit upfront.

Time and materials contracts: Under a time and materials contract, the seller agrees to
provide a specific product or service for an hourly rate or a fixed fee plus the cost of materials.
Payment is typically made in installments throughout the course of the contract.

Unit price contracts: Under a unit price contract, the seller agrees to provide a specific product
or service for a fixed price per unit. Payment is typically made upon delivery of the product or
service.

Cost-plus contracts: Under a cost-plus contract, the seller is reimbursed for all costs incurred
in completing the contract, plus a profit margin. Payment is typically made in installments
throughout the course of the contract.

Specific examples

● Construction contracts: Construction contracts are typically fixed-price contracts. The


contractor agrees to build a specific structure for a specific price. Payment is typically
made in installments throughout the course of the project.
● Software development contracts: Software development contracts are typically time and
materials contracts. The developer agrees to develop a specific software application for an
hourly rate or a fixed fee plus the cost of materials. Payment is typically made in
installments throughout the course of the development process.
● Service contracts: Service contracts are typically fixed-price contracts or time and
materials contracts. The contractor agrees to provide a specific service, such as IT support
or landscaping, for a specific price or an hourly rate. Payment is typically made on a
monthly basis.

It is important to note that these are just general examples. The specific method of payment
under a particular contract will vary depending on the type of contract and the specific terms
agreed upon by the parties.

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