Backup Agreement

Posted in Operations and Supply Chain Terms, Total Reads: 1950

Definition: Backup Agreement

A backup agreement is an agreement signed as a security for the seller of an item so that he can go to the backup buyer through this agreement in case the primary agreement does not fall through successfully.

This kind of an agreement is generally used with items that have a high capital cost or a very high one-time procurement cost so as to mitigate the risk of loss in case the primary deal does not come through.

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