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Home→The Westburn Dictionary of Marketing→T→terms of trade

terms of trade

Definition:
(1) The terms under which a seller is willing to sell and, thus, the benefits to and responsibilities of the buyer. Traditionally such terms cover, for example, the period allowed for payment, procedure for faulty product, special discounts for cash/ prompt payment, time to be allowed for delivery etc. (2) The ratio of the price of imports (expressed as a percentage or index number of a base year) to the price of exports. Since UK imports are largely (but not wholly) food and raw materials, British terms of trade tend to move favourably if raw material prices fall, or at least rise more slowly than the price of manufacture, and vice versa. The terms of trade particularly affect the prosperity of the poorer raw material exporting countries whose ability to pay for imports can be seriously impaired by a worsening in the terms of trade.

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© Westburn Publishers Ltd 2002, The Westburn Dictionary of Marketing edited by Michael J Baker, ISBN 978-0-946433-01-8. www.themarketingdictionary.com. Entry: [James R. Bureau and James M. Livingstone],.