[Vocabulary] refund and give credit

[OlgaN]

Could you, please, explaine me the difference in this sentence between refund and give credit.



"MANUFACTURER shall also give a refund to DISTRIBUTOR, or give DISTRIBUTOR a credit, in the amount of the TRANSFER PRICES paid by DISTRIBUTOR for the recalled goods"

Does the word refund mean that the manufacturer will return money to the distributor and give credit - that the manufacturer will not actually return money but , for example, allows to buy goods in the amount of recalled goods?


Thank you!

 

[emsr2d2]

If a company gives a customer a refund, then it actually returns the money that was paid. It might return the money in cash, or add the money back on to that customer's credit card. The customer then has their money back and is free to go and spend it anywhere.

If a company gives a customer a credit instead, then they basically tell the customer that they can spend the same amount of money that they already spent again (for free!) The customer will have to spend the money with the same company.


I buy a camera for $300 from Macy's.
The camera is faulty.
I complain to Macy's and they agree to give me a refund of $300.
They give me $300.
I leave the store with $300 in my pocket and I can spend it at another store.

I buy a camera for $300 from Macy's.
The camera is faulty.
I complain to Macy's and they agree to give me a $300 credit.
I now have $300 of "virtual" money but I have to spend it in Macy's.
I pick up $300 of clothes in Macy's and take them to the checkout.
I use my $300 credit to pay for the clothes so I don't actually give the checkout assistant any money.
I have now used my $300 credit.
I leave the store with $300 of clothes.

The same meanings apply to your manufacturer and distributor example.

 

[OlgaN]

Thank you very much for your explanation!