Under the American Neutrality Act of 1937 the US was forbidden from supplying weapons and goods to any country involved in a war. Cash and carry is a law that changed the Neutrality Act to allow countries at war to purchase American goods as long as they paid cash and picked up their orders in American ports.
This system worked to advantage of both buyer and seller by allowing the US to remain neutral and providing Britain and France with the weapons they urgently needed .
However, the system soon stumbled when France was defeated less than a year later leaving Britain to fight on alone. As cash was required for the purchases Britain was rapidly approaching bankruptcy. To overcome this problem the "Lend-Lease" act was passed by Congress in 1941, under which the US was able to lend, lease or exchange war materials with other nations.