Loan Agreement
A loan agreement is a contract between a borrower and a lender which regulates the mutual promises made by each party. There are many types of loan agreements, including "facilities agreements," "revolvers," " term loans," "working capital loans." Loan agreements are documented via a compilation of the various mutual promises made by the involved parties. Prior to entering into a commercial loan agreement, the "borrower" first makes representations about his affairs surrounding his character, creditworthiness, cashflow, and any collateral that he may have available to pledge as security for a loan. These representations are taken into consideration and the lender then determines under what conditions (terms), if any, they are prepared to advance money. Loan agreements, like any contract, reflect an "offer," the "acceptance of the offer," "consideration," and can only involve situations that are "legal" (a term loan agreement involving heroin drug sales is not "legal"). Loan agre ...
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Contract
A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to transfer any of those at a future date. In the event of a breach of contract, the injured party may seek judicial remedies such as damages or rescission. Contract law, the field of the law of obligations concerned with contracts, is based on the principle that agreements must be honoured. Contract law, like other areas of private law, varies between jurisdictions. The various systems of contract law can broadly be split between common law jurisdictions, civil law jurisdictions, and mixed law jurisdictions which combine elements of both common and civil law. Common law jurisdictions typically require contracts to include consideration in order to be valid, whereas civil and most mixed law jurisdictions solely require a meeting of the mind ...
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Borrower
A debtor or debitor is a legal entity (legal person) that owes a debt to another entity. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor. When the counterpart of this debt arrangement is a bank, the debtor is more often referred to as a borrower. If X borrowed money from their bank, X is the debtor and the bank is the creditor. If X puts money in the bank, X is the creditor and the bank is the debtor. It is not a crime to fail to pay a debt. Except in certain bankruptcy situations, debtors can choose to pay debts in any priority they choose. But if one fails to pay a debt, they have broken a contract or agreement between them and a creditor. Generally, most oral and written agreements for the repayment of consumer debt - debts for personal, family or household purposes secured primarily by a person's residence - are enforceable. For the most part, debts that are business-related must be made in writin ...
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Gross-up Clause
{{Use dmy dates, date=October 2015 A gross-up clause is a provision in a contract which provides that all payments must be made in the full amount, free of any deductions without exercising any right of set-off. The provision will usually indicate that if there is a mandatory withholding or deduction by operation of law (usually with respect to tax), then the paying party shall "gross up" the payment so that the receiving party receives the same net amount. A gross-up clause is also used when a payment that is made will be subject to taxes and the payer makes an additional payment to indemnify the recipient against the taxes – that payment will also be subject to tax. The sequence of additional payment, tax calculation, additional payment continues until the recipient receives the same amount, net of all the taxes, as would have been received had there been no taxes. The formula for calculating the total amount of a grossed-up payment is (the amount of the payment) divided by ( ...
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Cov-lite
Cov-lite (or "covenant light") is financial jargon for loan agreements that do not contain the usual protective covenants for the benefit of the lending party. Although traditionally banks have insisted on a wide range of covenants that allow them to intervene if the financial position of the borrower or the value of underlying assets deteriorates, around 2006 the increasing strength of private equity firms and the decreasing opportunities for traditional corporate loans made by banks fueled something of a "race to the bottom", with syndicates of banks competing with each other to offer ever less invasive terms to borrowers in relation to leveraged buy-outs. In the wake of the Financial crisis of 2007–08 growth in the use of cov-lite loans stalled, but more recently they have increased in popularity again. Cov-lite lending is seen as riskier because it removes the early warning signs lenders would otherwise receive through traditional covenants. Against this, it has been coun ...
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Cleanup Clause
A cleanup clause is a contractual provision in a loan agreement which provides that all loans must be repaid within a specified period, after which no further loans will be made available to the debtor A debtor or debitor is a legal entity (legal person) that owes a debt to another entity. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor. When the counterpart of this ... for a specified "cleanup" period. It may also refer to revolving line of credit. A lender may require a cleanup period annually, for example a borrower may have to pay down the balance to zero for 30 days. Contract clauses {{Finance-stub ...
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Debt
Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The debt may be owed by sovereign state or country, local government, company, or an individual. Commercial debt is generally subject to contractual terms regarding the amount and timing of repayments of principal and interest. Loans, bonds, notes, and mortgages are all types of debt. In financial accounting, debt is a type of financial transaction, as distinct from equity. The term can also be used metaphorically to cover moral obligations and other interactions not based on a monetary value. For example, in Western cultures, a person who has been helped by a second person is sometimes said to owe a "debt of gratitude" to the second person. Etymology The English term "debt" was first used in the late 13th century. The term "debt" comes ...
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Process Agent
A process agent is a representative upon whom court papers may be served. In the US, the role is generally a requirement of US State law and is known as a registered agent, a resident agent or statutory agent. Process agents are also utilized in the US by truck drivers, brokers or freight forwarders A freight forwarder, or forwarding agent, is a person or company who, for a fee organizes shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer or final point of distribution.

Forum Selection Clause
A forum selection clause (sometimes called a dispute resolution clause, choice of court clause, jurisdiction clause or an arbitration clause, depending upon its form) in a contract with a conflict of laws element allows the parties to agree that any disputes relating to that contract will be resolved in a specific forum. They usually operate in conjunction with a choice of law clause which determines the proper law of the relevant contract. There are three principal types of clause: * that all disputes must be litigated in a particular court in a jurisdiction agreed upon by the parties; * that disputes must be resolved pursuant to a dispute resolution process, such as mediation, arbitration, or a hearing before a special referee or expert determination; or * the clause might refer to a combination, requiring a specific process to be carried out in a specific location, and if that process fails to resolve the issue, for litigation to be conducted in a particular court. A simpl ...
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Choice Of Law Clause
A choice of law clause or proper law clause is a term of a contract in which the parties specify that any dispute arising under the contract shall be determined in accordance with the law of a particular jurisdiction. An example is "This Agreement shall be governed by, and construed in accordance with, the law of the State of New York." A choice of law clause may be combined with a forum selection clause. The combined clause would include the choice of law that is to govern any dispute arising under the agreement, and the choice of forum where disputes will be heard. Once implemented, a choice of law clause will generally be upheld by the court, so long as it is bona fide, legal, and not contrary to public policy. Explanation Choice of law clauses provide certainty about the law to be applied should a contractual dispute arise. As business transactions and contractual obligations may cross jurisdictional borders within a nation, as well as international borders, both physically ...
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Counterparty
A counterparty (sometimes contraparty) is a legal entity, unincorporated entity, or collection of entities to which an exposure of financial risk may exist. The word became widely used in the 1980s, particularly at the time of the Basel I deliberations in 1988. Well-drafted contracts usually attempt to spell out in explicit detail what each counterparty's rights and obligations are in every conceivable circumstance, though there are limits. There are general provisions for how counterparties are treated under the law, and (at least in common law legal systems) there are many legal precedent A precedent is a principle or rule established in a previous legal case that is either binding on or persuasive for a court or other tribunal when deciding subsequent cases with similar issues or facts. Common-law legal systems place great valu ...s that shape the common law. Financial services sector Within the financial services sector, the term market counterparty is used to refer to gov ...
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Severability Clause
In law, severability (sometimes known as salvatorius, from Latin) refers to a provision in a contract or piece of legislation which states that if some of the terms are held to be illegal or otherwise unenforceable, the remainder should still apply. Sometimes, severability clauses will state that some provisions to the contract are so essential to the contract's purpose that if they are illegal or unenforceable, the contract as a whole will be voided. However, in many legal jurisdictions, a severability clause will not be applied if it changes the fundamental nature of the contract, and that instead the contract will be void; thus, often this is not explicitly stated in the severability clause. Sample clause If a provision of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect: #the validity or enforceability in that jurisdiction of any other provision of this Agreement; or #the validity or enforceability in other jurisdictions o ...
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Set-off (law)
In law, set-off or netting are legal techniques applied between persons or businesses with mutual rights and liabilities, replacing gross positions with net positions. It permits the rights to be used to discharge the liabilities where cross claims exist between a plaintiff and a respondent, the result being that the gross claims of mutual debt produce a single net claim. The net claim is known as a net position. In other words, a set-off is the right of a debtor to balance mutual debts with a creditor. Any balance remaining due either of the parties is still owed, but the mutual debts have been set off. The power of net positions lies in reducing credit exposure, and also offers regulatory capital requirement and settlement advantages, which contribute to market stability. Difference between set-off and netting Whilst netting and set-off are often used interchangeably, a legal distinction is made between ''netting'', which describes the procedure for and outcome of implementin ...
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