- Onerous Contract
- A type of contract where the costs involved with fulfilling the terms and conditions of the contract are higher than the amount of economic benefit received. According to the International Accounting Standards (IAS), there are two methods for the recognition of a provision for this type of contract: the liability and impairment approaches.
The liability approach refers to the onerous contract as a liability for the company's contractual responsibilities.
The impairment approach refers to a lease-related onerous contract as both an unrecognized asset and liability. Furthermore, the contract uses a long-lived asset impairment recognition system.
Onerous contracts can occur in situations where a company has a contract to supply a product that costs more to produce (for example, due to a rise in raw material costs) than originally determined by the terms of the contract.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
onerous contract — ➔ contract1 * * * onerous contract UK US noun [C] ► LAW a formal agreement that brings disadvantages for one of the people or companies that have signed it: »One of the common problems facing businesses is that the business has at some point… … Financial and business terms
onerous contract — see contract Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 … Law dictionary
onerous contract — gratuitous and onerous contracts Gratuitous contracts are those of which the object is the benefit of the person with whom it is made, without any profit or advantage received or promised as a consideration for it. It is not, however, the less… … Black's law dictionary
onerous contract — A contract supported by a valid consideration … Ballentine's law dictionary
an onerous contract — nuostolinga sutartis statusas Aprobuotas sritis buhalterinė apskaita ir finansinė atskaitomybė apibrėžtis Sutartis, pagal kurią neišvengiamos sutartyje numatytų įsipareigojimų įvykdymo išlaidos viršija pagal tą sutartį numatomą gauti ekonominę… … Lithuanian dictionary (lietuvių žodynas)
onerous — oner·ous / ä nə rəs, ō / adj 1: excessively burdensome or costly 2: involving a return benefit, compensation, or consideration an onerous donation used chiefly in the civil law of Louisiana see also onerous contract at … Law dictionary
contract — con·tract 1 / kän ˌtrakt/ n [Latin contractus from contrahere to draw together, enter into (a relationship or agreement), from com with, together + trahere to draw] 1: an agreement between two or more parties that creates in each party a duty to… … Law dictionary
onerous — /ownaras/ A contract, lease, share, or other right is said to be onerous when the obligations attaching to it unreasonably counterbalance or exceed the advantage to be derived from it, either absolutely or with reference to the particular… … Black's law dictionary
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