Throughput Agreements

A debit contract is an agreement between two parties under which a service or property is guaranteed by one of the parties for a specified period of time. A small business can use debits as an indirect form of project financing by providing access to materials and not real money. Debit contracts are also called debit agreements. Once the flow agreement is signed between the oil company and the pipeline owner, the oil company has the right, in this example, to pump its oil through the pipeline for the duration of the contract. The pipeline company guarantees the oil company some form of oil transport through the pipeline for a specific fee, thus providing the oil company with equipment – the pipeline – needed to produce its fuel. .

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