PURCHASE AND SALE OF GOODS – TRADE AND DISTRIBUTION – COMMERCE JAMB & WAEC GUIDE KEYPOINTS

April 4, 2026 Be first to comment Daniel DTW Tutor

CHAPTER 8: PURCHASE AND SALE OF GOODS

8.1 PROCEDURE AND DOCUMENTS

  • Procedure: Inquiry → Quotation → Order (Indent) → Dispatch → Delivery Note/Consignment Note → Invoice (The Bill) → Payment → Receipt.
  • Documents Used: Quotation (seller’s proposed prices), Pro Forma Invoice (preliminary, non-binding invoice), Credit Note (issued to customer for overpayment or returned goods, decreasing their debt), Debit Note (issued to customer for undercharge, increasing their debt).

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8.2 TERMS OF TRADE

  • Trade Discount: A reduction from the list price given to trade customers (e.g., wholesalers) for buying in bulk.
  • Cash Discount: A reduction offered for prompt payment (e.g., “5% 10 days” means a 5% discount if paid within 10 days).
  • Quantity Discount: Reduction for buying large quantities.
  • C.O.D. (Cash on Delivery): Payment is made at the time of delivery.
  • C.I.F. (Cost, Insurance, and Freight): The quoted price includes all costs up to the destination port. Seller pays all costs.
  • F.O.B. (Free On Board): The quoted price covers all costs until the goods are loaded onto the ship. Buyer pays insurance and freight.
  • E. and O.E. (Errors and Omissions Excepted): A phrase used on invoices reserving the seller’s right to correct accidental errors.

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8.3 TERMS OF PAYMENT

  • Cash: Immediate payment upon transaction.
  • Hire Purchase: Buyer pays a deposit and the rest in instalments. Ownership transfers only upon the final payment.
  • Deferred Payment (Credit Sale): Buyer takes possession immediately and pays the full sum later (e.g., 30 days credit). Ownership transfers immediately.

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8.4 MEANS OF PAYMENT

  • Legal Tender: Currency (notes and coins) which, by law, must be accepted in settlement of a debt.
  • Cheques: An order to a bank to pay a specified sum of money to a named person.
  • Standing Order: An instruction to a bank to pay a fixed amount to a named recipient regularly.
  • Bank Drafts: A cheque drawn by a bank on itself, considered a guaranteed payment.
  • Stamps, Postal Orders, Money Orders: Instruments used for transmitting small sums of money, usually through the post office.
  • Bills of Exchange: An unconditional order in writing from a seller (drawer) to a buyer (drawee) to pay a fixed sum at a definite future date.
  • Promissory Notes: An unconditional promise in writing by a debtor to pay a fixed sum to a creditor at a future date.

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Commerce Purchase of Goods Sale of Goods Buying and Selling Trade Transactions Commercial Activities Business Operations Types of Sales Cash and Credit Sales Goods Exchange Marketing Consumer Goods

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