RISK PARTICIPATION AGREEMENT
- EXAMPLE TEXT -
RON WELLS CCE
It is recommended that Tax and International Commercial Law advice should be obtained before a text such a this is utilised.
"Seller" as Supplier
"Bank" as Risk Participant
agree to assume part of the payment risk emanating from the following commercial transaction.
In accordance with contract (reference number) Seller has sold (quantity) of (product description) to be delivered in (delivery month or date range) , with payment due (number) days after (Bill of Lading date or other reference date) (the "Due Date") representing a total value of approximately USD
(full name of buyer) ("Buyer") has purchased the above mentioned goods and has issued a Payment Undertaking.
The above mentioned amount of approximately USD will be paid by Buyer directly to Bank's account with (name of Banks USD clearing bank) on the Due Date (see above). These funds received on Bank's account will be remitted to Seller's account at (name of Sellers bank) net of Banks fee, as per Paragraph 6 below, on the Due Date (see above).
Therefore, the parties agree as follows;
1. Risk Participation
Seller and Bank will share pro rata in the payment risk of Buyer on a several basis as follows:
a) Bank USD . (US Dollar ..)
b) Seller USD .. . . (US Dollars )
2. Banks Undertaking
Bank undertakes to purchase the pro rata share of the account receivable due and shall pay an amount up to its risk participation amount if and only if, Buyer fails to pay the contractual obligation on or before the 7th banking day in New York following the Due Date. Bank shall not have any obligation to make any payment to Seller if the failure by Buyer to pay is based upon non-performance by Seller - Bank accepts that it will be sufficient evidence of performance by Seller under the terms and conditions agreed between Buyer and Seller if Seller presents to Bank a copy of the (Bill of Lading or other delivery document) conforming to the terms and conditions agreed between Buyer and Seller in the underlying contract. In case of partial default by Buyer, Banks purchase undertaking amount will be reduced to the pro rata share of its participation in the amount in default.
3. Seller's Undertaking
In case of a claim, Seller undertakes to sell and assign the pro rata share of the account receivable to Bank subject to the terms and conditions of this Risk Participation Agreement.
Seller is responsible to obtain all necessary legal and other approvals required for Seller to enter into this agreement.
4. Effective Date
This purchase undertaking will be effective and legally binding on the date Bank receives this Agreement, duly countersigned by Seller, and all Conditions Precedent have been satisfied.
This agreement is valid until (date)... Any claims hereunder must be received by Bank no later than (date)... . Notwithstanding the foregoing, this agreement shall not expire as to any claims made prior to (date)... which have not been finally settled between Bank and Seller prior to (date)...
Seller agrees to pay to Bank ...(agreed charge rate) on Banks aggregate maximum risk participation of USD .(US Dollars .). This commission will be deducted from the payments received, or in case of non-payment by Buyer, by direct payment arranged by Seller to Bank.
7. Conditions Precedent
In order for this Agreement to become effective Seller will provide Bank with the following documents:
a) Copy/ies of the related commercial invoice(s).
b) A Payment Undertaking signed by Buyer (as per enclosure text). Buyers signature is to be authenticated by a well known commercial bank in form and substance satisfactory to Bank.c) Copy/ies of appropriate shipping documents.
8. Conditions for Claim
All costs and expenses (excluding in-house legal or administrative expense) incurred by Bank in connection with the collection of any amounts payable by Buyer in connection with the enforcement of any document relating to the Payment Undertaking shall be borne between Bank and Seller pro rata on the basis of this Risk Participation Agreement.
Any notice under this Agreement shall be in writing (including telegraphic, telex or facsimile communication). All such notices shall be deemed to be given when transmitted by telex and the appropriate answer-back is received, transmitted by facsimile machine and confirmed in writing, delivered to the telegraphic office, personally delivered or, in the case a mailed notice, when sent by registered or certified mail, postage prepaid to the participants above-mentioned addresses or to such other address as may be advised from time to time to Bank in writing.
10. Governing Law and Jurisdiction
This Agreement shall be governed by and construed in accordance with the law of England. All legal aspects of the relationship between Seller and Bank shall be governed by English Law and the place of exclusive jurisdiction of lawsuits and any other kinds of legal proceedings shall be the Courts of England.
Agreed accepted by
Agreed accepted by
© Copyright 2000 R K Wells
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Last Updated: June 28, 2018 18:39 +0100