Business and Personal Finance Dictionary

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• FIRM COMMITMENT
  
  An agreement with an unrelated party that is binding on both parties and that is usually legally enforceable. In FAS 133, FASB specifies that the following are both satisfied for a firm commitment: a) The agreement specifies all significant terms, including the quantity to be exchanged, the price at which the quantity will be exchanged, and the timing of the transaction. b) The agreement includes a disincentive for nonperformance that is sufficiently large to make performance probable.
  
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