drop-dead fee

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A fee paid by an individual or company that is bidding for another company to the organization lending the money required to finance the bid. The fee is only paid if the bid fails and the loan is not required. Thus, for the price of the drop-dead fee, the bidder ensures that the interest charges are only incurred if the money is required. It is sometimes called a termination fee.

Subjects: Financial Institutions and Services.

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