Facility Agreement India: Understanding the Basics
A Facility Agreement is a popular legal document used in India that outlines the terms and conditions between the borrower and the lender. This agreement is used to document the details of any facility extended by the lender to the borrower, such as loans, credit lines, overdraft facilities, guarantees, or other forms of credit.
The facility agreement serves as a legally binding contract between the two parties. It specifies the terms and conditions under which the borrower can access the credit facility, including the repayment terms and any associated fees. The agreement also outlines the expectations and obligations of both parties throughout the duration of the facility.
What is Included in a Facility Agreement?
The facility agreement will typically include the following sections:
– General Terms and Conditions: This section outlines the general terms and conditions of the facility and how it will operate.
– Purpose and Scope: This section outlines the purpose of the facility, how it will be used, and the scope of the agreement.
– Repayment Terms: This section specifies the repayment terms of the facility, including the repayment schedule, interest rates, and fees.
– Security: This section outlines any security or collateral that the borrower is required to provide to the lender.
– Representations and Warranties: This section includes a list of representations and warranties made by the borrower to the lender.
– Events of Default: This section outlines events or circumstances that may trigger a default of the facility.
– Governing Law and Jurisdiction: This section outlines the governing law and jurisdiction of the facility agreement.
Why is a Facility Agreement Important?
A facility agreement is an important legal document that protects the interests of both the borrower and the lender. It outlines the terms and conditions of the credit facility, including repayment terms and the obligations of both parties. The agreement also specifies the consequences of default or breach of any of the terms of the agreement.
The facility agreement is legally binding, which means that both parties are obligated to follow the terms outlined in the agreement. This provides a level of certainty and stability for both parties and helps to prevent any misunderstandings or disputes.
Conclusion
In summary, a Facility Agreement is an important legal document used in India that outlines the terms and conditions of any credit facility extended by the lender to the borrower. It specifies the repayment terms, obligations of both parties, and consequences of default. If you are considering taking out a loan or accessing credit in India, it is important to seek legal advice and ensure that you understand the terms and conditions of any facility agreement.