What's the meaning of this phrase "to apply outstanding credits"

Question

Hello,I am reading a sales agreement, and there is  a sentence that i am not quite sure of the meaning. Could someone please help me out?The context is, " Contractor agrees that PACCINT has the right to apply any outstanding credits due to Contractor against any indebtedness of Contractor to PACCINT whether then due or to become due."tsWhat is the meaning of "to apply an outstanding credits"?Cheers

Avangi · Accepted Answer

ResplendaWhat is the meaning of "to apply any outstanding credits"?

It sounds like they owe each other money.
The money which P owes C is in the form of credits.
That is, C may be entitied to obtain X dollars worth of goods from P.
Meantime, C owes P some cash.

It's not exactly clear to me which is due "some now; some later" - the credit or the cash.

According to the agreement, C may use some of his credits to cancel out some of the cash he owes to P.

We don't know exactly how C came by the credits. Perhaps he bought and paid for some materials from P, and later returned some of them for credit.
(Meantime, C owes P some cash.)

Quite often when you "return" something, the person you bought it from doesn't want to give you your money back. He wants to give you credit toward another purchase.

But now there is this sales agreement between the two parties which allows C to use his credits to cancel out some of his cash debt to P.

"Any outstanding credits" would be the ones which have not yet been used, or "redeemed."
C is allowed to "apply" them to reduce his indebtedness to P.

Anyway, that's the way I see it. - A.

What's the meaning of this phrase "to apply outstanding credits"

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