Take or Pay

You have an old junker car you want to get rid of. Your cousin says he'll take it off your hands for $200. He plans to turn it into a a giant terrarium in the backyard.

You're excited. You've been trying to get rid of that thing for a long time. You're so excited...that you rush right out and buy a new car. The same day, you drive the old one over to your cousin's house. When you get there, he sheepishly explains that he can't take the car anymore. Their roommate nixed the terrarium idea and won't let him take the old junker.

You've got a problem. You only have a one-car garage (now filled with your new car) and no street parking by your house. You begin toying with the idea of just filing off the VIN number and leaving it in a ditch somewhere.

You should have had a take-or-pay provision in your deal with your cousin. It states that a customer will take delivery of a certain amount product, or pay a penalty. It's a way for a supplier to keep from getting stuck with a bunch of product that a customer suddenly decides they don't want.

If you had a $100 take-or-pay deal with your cousin, you might have at least had enough to get the old car towed to a junkyard. When he turned you down, saying he couldn't take the car anymore, that would have triggered the take-or-pay provision. He would have had to give you $100. Or, knowing he would have been on the hook for $100 either way, your cousin might have just paid the $200 for the car and dealt with his roommate later.