How do teaching buy outs work? Normally a professor is paid for eight to nine months each academic year for teaching several courses in the period. However, if a professor gets a research grant, he can support himself by the grant in the summer months, or teach fewer courses.

I'd like to know how it works exactly. Let's say, if a professor only teaches half of the normal load of courses, then he will receive half of his normal salary from the department and the rest is covered by the grant, right? If the grant is large enough, can he choose not to teach any course without loss of pay?
Nearly every school will have a different policy on buying out of teaching.

In the US, many universities have a breakdown of the position's time. For example, you may be hired to do 60% research, 20% teaching, 20% service. At some universities, this means the grants must cover the percentage of your salary that you are buying out of. At others, there is a flat buyout price (presumably the amount it costs to pay an instructor). Although, some also have requirements for a minimum number of courses you must teach per year (can't buy out).

You can also get a reduced teaching load through additional service (e.g, serving as graduate coordinator or department chair).