AGREED COST Meaning and
Definition
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Agreed cost refers to a specific financial arrangement between two parties where the cost or price of a product, service, or project is determined and mutually agreed upon in advance. This agreement ensures that both parties are aware of and accept the specified cost, eliminating uncertainties or potential disputes related to pricing. Agreed cost often comes into play in various contexts, such as construction contracts, business partnerships, service provision agreements, or purchase agreements.
In the realm of construction, for instance, when engaging in a construction project, the client and contractor may negotiate an agreed cost, establishing the exact amount that the contractor will be paid for undertaking the project. This agreement typically includes costs related to labor, materials, equipment, and any additional expenses required to complete the construction work.
The agreed cost concept is also relevant in sales transactions, specifying the price at which a product or service will be sold. This ensures that the buyer and seller are on the same page regarding the financial terms of the transaction. By mutually agreeing upon the cost upfront, both parties demonstrate their willingness to proceed with the business arrangement, each having a clear understanding of the financial implications.
In summary, agreed cost is a definitive pricing arrangement that is established through mutual consent before a transaction, project or service commences, preventing potential misunderstandings or conflicts related to cost between the involved parties.
Common Misspellings for AGREED COST
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Etymology of AGREED COST
The term "Agreed Cost" does not have a specific etymology, as it is a combination of two separate words: "agreed" and "cost".
"Agreed" comes from the Old French word "agreer", meaning "to receive favorably" or "to approve". This word was derived from the Latin word "ad-" meaning "to" and "gratus" meaning "pleasing" or "agreeable".
"Cost" comes from the Old French word "coste", which originally meant "rib" or "side". In the context of economics and finance, it refers to the amount of money or resources required to produce or acquire something.
Therefore, the term "Agreed Cost" simply combines the meaning of these two words to indicate a mutually accepted or approved price or expense.
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