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Simple English definitions for legal terms
Electronic Data Interchange agreement
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A quick definition of Electronic Data Interchange agreement:
Electronic Data Interchange Agreement: An agreement between two parties that allows them to exchange data, such as purchase orders, through computers. The data is usually formatted according to a specific standard, like ANSI X12 or UN EDIFACT.
A more thorough explanation:
An Electronic Data Interchange Agreement, also known as an EDI Agreement, is a contract that outlines the rules and procedures for exchanging electronic data between two or more parties. This data can include things like purchase orders, invoices, and shipping notices.
When data is transmitted under an EDI Agreement, it is usually formatted according to an agreed-upon standard, such as the American National Standards Institute (ANSI) X12 standard or the United Nations Electronic Data Interchange for Administration, Commerce, and Transport (EDIFACT) standard.
Company A and Company B have an EDI Agreement in place for the exchange of purchase orders. Company A sends a purchase order to Company B in an electronic format that follows the agreed-upon standard. Company B receives the purchase order and processes it according to the terms of the agreement.
In this example, the EDI Agreement governs the exchange of purchase orders between Company A and Company B. The agreement ensures that the data is transmitted in a standardized format, making it easier for both companies to process and manage the information.