How would you define "Application of Funds" in a legal contract? (2024)

FAQs

What is the obligation of funds in a contract? ›

An obligation of funds is a legal liability to disburse funds immediately or at a later date as a result of a series of actions.

Contract Financing is covered in FAR Part 32 and is defined as the Government authorized payment of funds to the contractor prior to acceptance of supplies or services by the Government. Contract financing does not include invoice payments, payments for partial acceptance or lease or rental payments.

Once you've signed up and been approved for contract financing with a lender, you receive a lump sum based on the size of the contract, often somewhere around 90% of the invoice itself, with the remaining 10% (minus fees) being released once the invoice is paid.

You can use your assets (equipment, accounts receivables, commercial properties, etc.) to secure government contract financing. Asset-based loans use company assets to secure a revolving line of credit or a business term loan.

Obligating funds to an Activity means to commit funds to an Activity in accordance with programmatic requirements for a grant appropriation. Once obligated, funds are then available for drawdown, that is, disbursem*nt of the funds.

Proof of funds refers to a document that demonstrates the ability of an individual or entity to pay for a specific transaction. A bank statement, security statement, or custody statement usually qualify as proof of funds. Proof of funds is typically required for a large transaction, such as the purchase of a house.

One such provision is known as the “Funding” clause, which reads as follows: “The parties understand and acknowledge that the funding of this Agreement is contained in the City's annual budget and is subject to the approval of the City in each fiscal year.

Definition. For any financial Contract, Contractual Cash Flows (also Scheduled Cash flows) denotes the Cash Flow (money) exchanges between the contracting parties as stipulated in the contract documentation (loan agreement, Terms Sheet, Prospectus etc.).

Funding Out Clause. This is one way a contract may be terminated since Institutions are not bound by the terms of a contract if the legislature does not appropriate funds.

A financial contract, in the form of securities, determines the division. For example, if projects are financed with debt, investors receive the entire proceeds from the sales until the debt is fully repaid and the additional proceeds beyond this amount will go to the firm.

How do you make a financing contract? ›

Foremost, contracts function as a reliable record of the rights, responsibilities, and obligations of the parties who have signed it. An effective contract will describe, in detail, what duties each party has to one another, how these ought to be performed, what they will be measured against, and when.

LEONID partners with innovators who deliver highly technical solutions that propel social and economic progress for everyone on our planet. From National Intelligence to Aerospace and Defense to Cybersecurity, we finance the government contract projects that bring the most good to our collective future.

Time and Materials Contracts

Also known as T&M contracts, this type provides for acquiring supplies or services on the basis of direct labor hours and actual cost for materials. Time and materials contracts can be more straightforward – but accounting of all time and materials used is necessary.

The government is generally required to pay you for work on a government contract within 30 days, and it usually requires the use of electronic fund transfers.

Commitments - Accounting related to funds for future known or expected spending (pre-encumbered). The commitments ledger is utilized to track journal entries for requisitions and payroll for unfilled positions. Obligations – Accounting related to funds that represent obligations to pay (encumbered).

Common essential debts include basic needs like rent or mortgage payments and utilities, as well as child support, school tuition, car payments, unpaid taxes, medical and auto insurance, and secured loans. Nonessential debts may include credit cards, loans from friends and family members, and other unsecured debts.

A contractual obligation (or duty) is something that parties agree to do or become responsible for when they sign a contract. These obligations can vary wildly between contracts, but they will usually fall into two broad categories: A promise to do something. A promise not to do something.

Payment is the performance of an obligation to pay money. A person under such an obligation is called a debtor, and a person to whom the obligation is owed is called a creditor. The obligation may arise in various ways, but it is most commonly the result of a commercial transaction or contract between the parties.