what is take or pay 
a take or pay clause in a contract stipulates that a buyer will take an agreed upon amount of a commodity from a seller on a certain date or pay a set penalty fee if it does not the fee is generally less than the full purchase price of the commodity who benefits from take or pay everyone benefits the supplier has its risk of spending capital to produce its commodity reduced because it knows it will get at least a certain amount of money for it the buyer benefits because it is free to search for a lower price for the commodity elsewhere the economy benefits because the provision facilitates trade and reduces transaction costs 