Free Trade Credit Agreement Outline

1. Title of Agreement

• Trade Credit Agreement

2. Introduction

• Date of Agreement

• Parties Involved

  • Lender (Party Extending Credit)

  • Borrower (Party Receiving Credit)

• Brief description of the purpose of the agreement.

3. Recitals (Background)

• A statement explaining the reason for entering the credit agreement (e.g., the Borrower is seeking credit for the purpose of purchasing goods or services).

4. Definitions

• Clear definitions of key terms such as:

  • "Credit Limit"

  • "Interest Rate"

  • "Due Date"

  • "Default"

  • "Goods/Products"

  • "Payment Terms"

  • "Late Fees"

  • "Repayment Period"

5. Credit Terms

• Amount of Credit: The total amount of credit extended by the Lender.

• Credit Limit: The maximum credit amount the Borrower can access at any given time.

• Interest Rate: Specify the rate of interest on the credit, if applicable.

• Repayment Schedule: How and when the Borrower is required to repay (e.g., weekly, monthly).

• Payment Method: Accepted methods of repayment (e.g., wire transfer, check, online payment).

• Currency: Specify the currency in which payments will be made.

6. Terms of Sale

• Product/Service Description: Detail the goods or services being provided under the credit arrangement.

• Pricing: Price of goods/services under the agreement.

• Delivery Terms: How and when goods/services will be delivered.

• Risk of Loss: Who bears the risk during the transit of goods.

7. Credit Assessment

• Creditworthiness: Any process for assessing the Borrower’s credit risk, including checks on financial status, history, etc.

• Documentation: Any documents required from the Borrower (e.g., financial statements, personal guarantees).

8. Payment Terms

• Due Date: When payments are due (e.g., 30 days from invoice date).

• Late Payments: Penalties for late payment, including interest and late fees.

• Early Payment Discount: Any discount offered for early payment.

• Partial Payments: Handling of partial payments or installment payments.

9. Security/Collateral (if applicable)

• Security Interest: Any collateral or personal guarantee required for credit.

• Collateral Description: Specifics about the collateral, if applicable.

• Rights to Seize Collateral: Conditions under which the Lender may seize collateral.

10. Default and Remedies

• Events of Default: Circumstances that would trigger a default (e.g., failure to make payments, insolvency, breach of contract).

• Remedies: Steps the Lender can take in case of default (e.g., demand for full repayment, legal action, seizing collateral).

• Acceleration Clause: Whether the full amount of credit becomes due upon default.

• Cure Period: Time allowed for the Borrower to rectify a default.

11. Signatures

Party A:

Party B:

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