Understanding Payment Structures In Contracts is crucial for business professionals. To help you improve your TOEIC Reading skills in this area, we’ve created a comprehensive practice test focusing on contract-related vocabulary and grammar. Let’s dive into the questions and put your knowledge to the test!
Part 1: Incomplete Sentences
-
The contract __ that payment must be made within 30 days of invoice receipt.
A) stipulates
B) regulates
C) dictates
D) mandates -
Failure to comply with the payment terms may result in __ of the contract.
A) termination
B) conclusion
C) finalization
D) completion -
The supplier offers a 2% discount for payments made within 10 days, known as __ terms.
A) early bird
B) prompt payment
C) quick cash
D) fast money -
The buyer must provide a __ of 20% of the total contract value before work commences.
A) deposit
B) investment
C) installment
D) contribution -
Monthly payments will be __ from the client’s bank account via direct debit.
A) withdrawn
B) extracted
C) removed
D) subtracted
interpreting discount offers in business contracts can significantly impact your company’s bottom line. It’s essential to understand these terms thoroughly to make informed decisions.
-
The contract includes a __ clause, allowing for price adjustments based on market fluctuations.
A) escalation
B) inflation
C) variation
D) fluctuation -
Late payments will incur a __ of 1.5% per month on the outstanding balance.
A) penalty
B) fine
C) charge
D) fee -
The payment schedule is __ to change, subject to mutual agreement between both parties.
A) subject
B) liable
C) prone
D) inclined -
All payments must be made in the __ currency specified in the contract.
A) designated
B) allocated
C) assigned
D) appointed -
The contract outlines a __ payment plan, with installments due at specific project milestones.
A) staged
B) phased
C) tiered
D) layered -
Any __ in payment may result in work stoppage until the account is brought current.
A) delay
B) postponement
C) deferment
D) lag -
The supplier reserves the right to __ goods if payment is not received within 60 days.
A) reclaim
B) repossess
C) retrieve
D) recover -
A __ fee will be applied to all returned checks or failed electronic payments.
A) processing
B) handling
C) service
D) administrative -
The contract includes a __ payment clause, requiring a lump sum upon project completion.
A) balloon
B) bulk
C) comprehensive
D) total -
Any __ to the payment terms must be agreed upon in writing by both parties.
A) modifications
B) alterations
C) adjustments
D) revisions
understanding sales contract obligations is crucial for maintaining positive business relationships and avoiding potential legal issues.
-
The buyer agrees to __ all payments in full without any deductions or withholdings.
A) remit
B) transfer
C) dispatch
D) forward -
In case of a payment dispute, the contract requires parties to seek __ before pursuing legal action.
A) mediation
B) arbitration
C) negotiation
D) reconciliation -
The supplier offers a __ pricing option, allowing the buyer to lock in current rates for future purchases.
A) fixed
B) stable
C) constant
D) steady -
The contract specifies a __ period of 14 days for the buyer to raise any invoice discrepancies.
A) grace
B) allowance
C) tolerance
D) leeway -
Failure to make timely payments may result in the __ of any discounts or preferential terms.
A) forfeiture
B) loss
C) cancellation
D) revocation -
The payment terms include a __ clause, allowing for automatic renewal unless either party provides written notice.
A) rollover
B) extension
C) continuation
D) perpetuation -
All payments are subject to a __ review to ensure compliance with anti-money laundering regulations.
A) thorough
B) comprehensive
C) extensive
D) rigorous -
The contract outlines a __ payment structure, with larger amounts due at the beginning and end of the project.
A) front-loaded
B) imbalanced
C) asymmetrical
D) disproportionate -
Any overpayments will be __ to the buyer’s account or refunded within 30 days.
A) credited
B) applied
C) allocated
D) assigned -
The supplier reserves the right to __ interest on any overdue amounts at the rate specified in the contract.
A) charge
B) impose
C) levy
D) exact -
In the event of a material breach, the non-breaching party may __ further performance under the contract.
A) suspend
B) halt
C) cease
D) discontinue -
The contract includes a __ clause, allowing for payments to be made in multiple currencies.
A) multi-currency
B) diverse-currency
C) varied-currency
D) flexible-currency -
Any __ in payment processing fees will be borne by the buyer.
A) increases
B) escalations
C) rises
D) surges -
The supplier may request a __ of creditworthiness before extending payment terms to new clients.
A) verification
B) validation
C) confirmation
D) authentication -
The contract stipulates that all payments are __ and non-refundable unless otherwise specified.
A) final
B) conclusive
C) definitive
D) absolute
TOEIC Reading practice on payment structures in contracts
Part 2: Text Completion
Text 1:
Payment terms are a crucial aspect of any business contract. They (31) __ the conditions under which payments will be made and received. Well-defined payment terms can help (32) __ cash flow and reduce the risk of disputes. When negotiating payment terms, it’s important to consider factors such as industry standards, the value of the goods or services, and the financial (33) __ of both parties. Clear communication and (34) __ documentation of agreed terms are essential for maintaining positive business relationships.
-
A) outline
B) outline
C) summarize
D) highlight -
A) improve
B) enhance
C) boost
D) escalate -
A) situation
B) position
C) standing
D) status -
A) thorough
B) comprehensive
C) extensive
D) detailed
Text 2:
Many contracts include provisions for early payment discounts. These incentives can be (35) __ for both buyers and suppliers. Buyers can reduce their overall costs by taking advantage of discounts, while suppliers benefit from improved cash flow. A common discount structure is “2/10 net 30,” which means a 2% discount if paid within 10 days, with the full amount due in 30 days. However, it’s important to (36) __ the potential savings against the cost of financing early payments. Companies should also consider the administrative (37) __ of processing payments more frequently. Ultimately, the decision to offer or accept early payment discounts should align with the company’s overall financial (38) __.
-
A) beneficial
B) advantageous
C) favorable
D) profitable -
A) weigh
B) balance
C) compare
D) contrast -
A) burden
B) load
C) weight
D) strain -
A) strategy
B) plan
C) approach
D) method
Text 3:
Late payment penalties are often included in contracts to encourage timely payments. These penalties can take various forms, such as interest charges or flat fees. While they serve as a (39) __ against late payments, it’s important to ensure that such penalties are (40) __ and legally enforceable. Some jurisdictions have laws limiting the amount of late fees that can be charged. Additionally, consistently enforcing late payment penalties can be (41) __ for maintaining the integrity of the payment terms. However, businesses should also consider the potential impact on customer relationships and may choose to (42) __ penalties in certain circumstances to preserve goodwill.
-
A) deterrent
B) prevention
C) hindrance
D) obstacle -
A) reasonable
B) fair
C) just
D) equitable -
A) crucial
B) vital
C) essential
D) critical -
A) waive
B) forfeit
C) relinquish
D) abandon
Text 4:
Electronic payment methods have become increasingly common in modern business transactions. These systems offer numerous advantages, including faster processing times, reduced administrative costs, and improved (43) __. However, they also present new challenges in terms of security and compliance. Contracts should clearly specify acceptable payment methods and any associated fees. It’s also important to address issues such as data protection and (44) __ in case of payment errors or fraud. As technology continues to evolve, businesses must stay (45) __ of new payment solutions and their potential impact on contract terms. Regular review and updating of payment-related clauses can help ensure that contracts remain (46) __ and effective in a rapidly changing business environment.
-
A) traceability
B) accountability
C) visibility
D) transparency -
A) liability
B) responsibility
C) obligation
D) duty -
A) informed
B) aware
C) cognizant
D) mindful -
A) relevant
B) applicable
C) pertinent
D) appropriate
Answer Key
Part 1: Incomplete Sentences
- A) stipulates
- A) termination
- B) prompt payment
- A) deposit
- A) withdrawn
- A) escalation
- A) penalty
- A) subject
- A) designated
- B) phased
- A) delay
- B) repossess
- C) service
- A) balloon
- C) adjustments
- A) remit
- B) arbitration
- A) fixed
- A) grace
- A) forfeiture
- A) rollover
- B) comprehensive
- A) front-loaded
- A) credited
- C) levy
- A) suspend
- A) multi-currency
- A) increases
- A) verification
- A) final
Part 2: Text Completion
31. A) outline
32. B) enhance
33. B) position
34. D) detailed
35. B) advantageous
36. C) compare
37. A) burden
38. A) strategy
39. A) deterrent
40. B) fair
41. C) essential
42. A) waive
43. D) transparency
44. A) liability
45. B) aware
46. A) relevant
By practicing with these TOEIC Reading questions focused on payment structures in contracts, you’ll be better prepared to tackle similar topics in the actual exam. Remember to pay close attention to context clues and specific vocabulary related to business agreements and financial terms.
As you continue your TOEIC preparation, focus on expanding your vocabulary related to business contracts and payment terms. Practice reading various types of business documents to familiarize yourself with common structures and phrases used in professional settings. This will not only improve your performance on the TOEIC Reading section but also enhance your overall business English skills.
