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iii. Terms of payment: The buyer and seller should have clear-cut agreement about
the terms of payment of goods. Goods may be sold on cash or credit. So, mode
of payment, discount rate, credit period, etc. must be cleared.
iv. Insurance : Insurance may be defined as a contract whereby one party agrees
to pay to another a sum of money in exchange for the same consideration on
the happening of a certain event. It is another important term which should be
clearly mentioned in the agreement. It should be clear between the two parties
(buyer and seller) about the party that will bear the insurance premium of the
goods.
v. Discount : Discount is the amount of rebate or concession given by the seller
while receiving payments of the goods. There are two types of discounts i.e.
cash discount and trade discount. Therefore, both the buyer and seller must be
confirmed about the types and rate of discount of payment.
vi. Means and mode of payments : Means and its mode are very important in
trade. Buyer and seller must be clear about the means of payment. Cash, cheque,
T.T., draft are popular means of payment and its mode of payment. Both parties
can negotiate as per their need and convenience.

Documents used in home trade
To avoid misunderstandings which may occur in course of transaction and used as
evidence of settling the disputes, some important paper works are done in home trade.
These paper works used in home trade by buyer and seller are called documents in
home trade. Some of the common documents which are used by buyer and seller in
home trade are as follows:-
a. Letter of inquiry : It is issued by buyer to possible seller to know the details of
required goods.
b. Quotation : It is the reply of inquiry letter by seller to buyer.
c. Price list : It is also issued by seller to buyer giving the detail price of goods
available for sale.
d. Order letter : It is the letter sent by buyer to seller after being satisfied with
goods and other terms and conditions.
e. Letter of acknowledgment: It is a kind of letter sent by seller to buyer which
conforms that the seller has received an order and accepted the same.
f. Delivery note : It is also sent by seller to buyer and it is the confirmation of
goods sent on the basis of terms and conditions.
g. Invoice : It is bill of goods sent along with dispatched goods by seller to buyer.
It also acts as evidence to claim the amount of goods supplied, specifications of
goods and means of payment.
h. Receipt of goods: It is a confirmation letter issued by transport company to
seller which ensures the goods are being dispatched to buyer.

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