Definitions (3)

1.Accounting: Earmarking or setting-aside of funds in response to a purchase requisition. These funds remain committed (encumbered) until the purchased good or service is paid-for after its receipt, thereby converting the encumbrance into an expenditure. See also obligation.
2.Lending: Written assurance from a lender to a borrower that a specified amount of loan or line of credit will be made available at a certain rate and during a certain period. Lenders charge a commitment fee for this service.
3.Law: Order by which a court directs a person to be confined in a penal or mental health institution.

Use commitment in a sentence

  • The company was in a bind when they ran short of funds because they already had a firm commitment to invest the money towards research and development.

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  • We went to the bank to apply for a commercial mortgage for our small business and finally after lots of paperwork and several months, we received a commitment from the bank for $50,000.

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  • In order to make a commitment to purchase a home or property, a prospective buyer puts up an amount of money in escrow.

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