Commercial Terms Used in Business Communication

Commercial Terms are a great fact of every type of business so we are mentioning here some commercial terms used in Business Communication. And we arrange it in alphabetical order.


Commercial Terms (A)

The term is used in Marine Insurance in connection with the constructive total loss of a vessel by any of the perils. It signifies the relinquishing by the insured of all interests in the wreckage for an agreed compensation.

Accommodation Bill
An Accommodation Bill is one, which is drawn and accepted solely with the object of obtaining temporary financial accommodation by the process of discounting. Such a bill is drawn on and accepted by a person without any consideration and therefore, the drawee is not actually indebted to the drawer. Accommodation bills are also known as ‘fictitious bills’; “kites’ and ‘windmills’.

Account Current
It is a statement of transactions in a debit and credit form between a seller and his customer. It is periodically prepared and sent by a trader to his debtor or creditor with a view to verifying the balance between them.

Account Sales
This is a statement supplied by an agent or a consignee who sells goods on behalf of the consignor. It shows particulars of goods sold, the gross proceeds realized, the expenses incurred by the consignee including his commission, and the net proceeds.

Act of God
This phrase is used in a bill of .1 lading. It refers to some unforeseen accident or natural cause that cannot be prevented by any reasonable foresight. Nobody is legally liable for any loss arising through an Act of God.

Active Partner
This name refers to a partner who has capital in the business and takes part in the management of its affairs. He is also known as an ordinary partner or a managing partner.

Actuary refers to the name of a person who is an expert in the science of insurance. He calculates annuities and other life insurance matters. He determines by actuarial valuation the profits of a Life Assurance Company and other kinds of companies.

Ad valorem
It means according to value”: An ad valorem refers to customs duty imposed on certain articles having regard only to the value or quality of articles and not the weight or quantity.

This is an order given by the court declaring a person insolvent.

This is the art of making the public aware of a particular commodity or service and inducing them to buy it. It is printed salesmanship.

Advice Note
This is written communication informing that a particular transaction has already taken place or is about to take place.

This is a written statement given on oath before a person of authority, such as a magistrate, a notary public, or a solicitor who has been appointed a commissioner for oaths.

After Date
It is used on a bill of exchange and it indicated that the maturity of the bill will be calculated at a fixed period after the date on the bill.

After Sight
This means that the due date of the bill is to be counted at a specified period from the date of presentation of the bill to the drawee.

It is a list of items proposed to be discussed at a forthcoming meeting. Generally, it is notified to the members to be present at the meeting before the date of the meeting.

All Rights Reserved
This is printed intimation in literary work. With these few words printed in books, the publishers or the writers as the case may be, notify that they reserve all sorts of legal rights as regards alteration, addition, translation, reproduction, etc. of a literary work. Along with when there is no space on a Bill of -Exchange for making further endorsements, a slip of paper is attached to the bill for the purpose. This slip is known as an “Along.” This is a part and parcel of the original bill.

Amalgamation is a combination of two or more independent business organizations carrying on the business of a like nature into a joint one and thus forming a new company.

It is the process of systematically writing off the cost of intangible assets such as goodwill, patent, etc.

It is a payment made to the insured annually. When an insured under a life policy elects to receive the payment from the life insurance company at a specified rate throughout his life or for some fixed number of years, the sum of money (i.e. stated yearly sum) thus received annually instead of a lump amount is known as an annuity.

Antedated Check
This is a check, which bears a backdate i.e. a date earlier than that on this, it is drawn. For example, a check is drawn on the 10th of July 2000 but if the date is written as the 1st of July 2000, then it will be called an Antedated Check.

Appellate Tribunal
It is one of the income Tax Authorities to whom an assessee is dissatisfied by the order of an Appellate Asst. Commissioner may seek relief against that order (assessment).

Apportionment means division into parts and it is used in accounts and insurance business. .When it is used in accounts it denotes the division of income and expenditure but in the case of insurance, it signifies the division of total loss to be borne by different parties involved.

It is an operation in which a .person buys goods in one (cheaper) market and sells in another (dearer) market in order to make a profit out of the price difference.

Arbitration is the process of having a dispute settled by a third and independent party.

Articles of Association
This is a document, which contains the rules and regulations governing the internal management, organization, and conduct of a joint-stock company. In it, the qualifications, remunerations,’ powers, and duties of the directors and other officers are clearly stated. It also stated the relation of shareholders among themselves, their powers, and claims.

It refers to the “valuation of income, property, etc., for the purpose of determining income tax.

At Discount
It is less valuable than the face value of shares or debentures.

At Premium
It means more value of shares and debentures i.e. higher value than the face value of shares or debentures.

Auction Sale
The auction sale is a method &f selling an asset to a person in competition in the presence of public bidders. The person offering the highest bid (highest amount of money) is given the property and thus auctioned. Generally, the Sale is done by giving a public notice in the press.

The audit is the verification (searching examination) of all books of accounts, vouchers, etc., by an auditor, or a specialized person; this is done to see that they are properly kept and that no fraud has been committed by the party maintaining these books. This checking job is generally conducted at regular intervals such as half-yearly or annually.

Commercial Terms used in Business Communication

Average Due Date
An Average Due Date is an equated date on which a single payment (in place of several payments) may be made of amounts due on different dates. This method of payment is used for settling payments of Bills of Exchange, which are due for payment on different dates.

Average Loss
It signifies the loss or damage, which arises inconsequent upon extraordinary sacrifices made or expenses incurred for the preservation of the ship and cargo. This loss must be borne proportionately by all who are interested e.g. cargo owners, ship owners, charterers, and so on. Remuneration paid to salvers to salve the whole of the property at risk, money paid to pirates for the purpose of saving both the ship and the cargo, and general average sacrifice such as throwing of goods into the sea to lighten the ship are the few examples of such loss.

The term is used to mean judicial decision, or judgment, especially of arbitrators.


Commercial Terms (B)

B.C. Rate
The abbreviation stands for the words ‘Bill Collection Rate.’ This is the rate of exchange at which bills received from foreign branches or agents will be collected in home currency.

In the b2b type, business takes place among many business organizations such as wholesalers and retailers.

Under this system, consumers buy goods directly from manufacturers or any other businessmen.

Back Freight
It denotes repayment of freight by a shipowner owing to his fault if a shipowner fails to deliver the goods according to the terms of the contract; the freight returned (partly or wholly) to the owner of the goods is called back freight.

Bad Debt
Debts, which are due to traders (debtors) because of credit sales and will not be realized at all, are called bad debts. This is considered a loss of the business and therefore debited to the profit and loss account.

Bailment refers to the delivery of goods or property by one to another for some purpose and when the purpose is accomplished; the goods will be returned or disposed of according to the direction of the person delivering them.

Balance of Trade
It is the difference- in money value between exports and imports of a country. This balance is regarded as favorable when the value of exported goods exceeds that of imported goods. It is unfavorable when the value of exported goods exceeds that of imported goods. It is unfavorable when the value of imported goods is more than that of the exported goods.

Balance Sheet
It is a statement of accounts showing the assets and liabilities of a trading concern. Normally it is prepared at the end of a year.

Bank Draft
A bank draft is a form 01 cheque or a bill of exchange drawn by one bank upon another directing to pay a certain sum of money. Any person can buy a draft from his bank payable at the required places. This is a convenient means of remitting money.

Bank Rate
A bank rate is the official minimum rate at which the central Bank of the country discounts approved bills of exchange or advances money to the scheduled banks.

A bankrupt is a debtor who is unable to pay his creditors in full. He has been adjudged bankrupt by a court and has given the whole of his estate to the official assignee to be realized, as far as possible for payment of his debt.

It is a marine insurance term, which signifies an unlawful or fraudulent act, or gross and culpable negligence of the master or crew of a ship in violation of his duty as such and to the prejudice of the owners or chatterers.

Barter Trade
Trade between persons, organizations, or countries that occurred on the basis of the exchange of one commodity by another, is called barter trade.

A bear is a broker on the stock exchange who sells shares, stocks, or other securities for future delivery anticipating a fall in price. At the time of making a contract of sale, he does not possess such securities.

He anticipates that their prices would decline so that when the time for delivery of those shares or stocks arrives, he may be able to buy them at lower prices and deliver ‘them at a contracted (higher) price and thus realize a profit.

Bearer Cheque
A bearer check is one, which bears the words “Or Bearer” across its face after the name of the payee. ‘Or Bearer’ means the cheque is payable to anyone who bears and presents it to the bank for payment. It can be negotiated or cashed without the endorsement of the payee.

Bill of Entry
This is an important document used in import trade. On the arrival of imported goods at the port, the importer is to give a declaration in writing to the customs authorities as regards the description of the goods, their quantity, and value, this declaration is made in a form known as a Bill of Entry.

Bill of Exchange
It is a credit instrument like a cheque or banknote. It contains an unconditional order in writing addressed by one person to another, signed by the person making it, and requiring the addressed to pay on demand or after a certain period of time, a sum of money to or to the order of, a specified person or bearer of the instrument.

Bill of Lading
It is a receipt given by the captain of the ship” of goods shipped on board his vessel. This important document used in foreign trade shows the description of goods, marks, weight, quantity, and freight. This certificate is treated as a document of title to the goods.

Commercial Terms used in Business Communication

Blank Cheque
It is a cheque on which -the amount of money payable is not mentioned by the drawer. It is kept blank to be filled in by the payee.

It is an attempt to cut off all supplies from a town or seaport during a state of war by surrounding the place with troops or ships.

Bonded Warehouse
It is a warehouse usually situated near the port where the imported goods can be stored temporarily pending the payment of import duty. The owners of the goods can be stored temporarily pending the payment of import duty. The owners of the goods have to furnish a bond to the customs authorities in this regard.

Bonus Shares
Bonus shares are free shares issued to the shareholders out of accumulated reserves. These reserves are created by the company out of profits and thereafter they are capitalized by the issue of bonuses, and shares. This is also known as a capitalized profit.

Book Debts
Book debts are the amounts outstanding at a given date and owing to a trader by his customers as shown by the books of account.

Boom is an upward rush of prices. It is the rapidity at which the price of particular goods increases in a particular market. In the boom period, general economic progress is witnessed.

Bottomry Bond
This is an important document used in foreign trade. When a ship requires repair, this bond is issued by the captain of the ship for procuring the loan. He procures loans by mortgaging the ‘bottom” or whole of the ship to regain it on the way of transit on the condition that the caption/the ship-owner will repay the loan when the ship will reach safely to the destination.

A broker is an intermediary agent in the purchase and sale of goods.

A bull is a speculator (on the stock exchange) who contracts to buy shares, stocks, and securities in the hope that the price will rise. Thus he expects to make a profit by selling them at a higher price when the day of settlement arrives.


We arrange our commercial terms in alphabetical order.

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