Receivables Sale Agreement for Canada

Receivables Sale Agreement Template for Canada

A comprehensive legal agreement governed by Canadian law that documents the sale and transfer of accounts receivable from one entity (the seller) to another (the purchaser). The agreement addresses critical aspects including the transfer mechanics, purchase price calculations, representations and warranties, and ongoing obligations of both parties. It incorporates relevant provisions from Canadian federal and provincial legislation, including the Personal Property Security Act (PPSA), privacy laws, and consumer protection regulations where applicable. The document includes detailed provisions for perfection of the sale, servicing arrangements, and compliance with Canadian regulatory requirements.

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What is a Receivables Sale Agreement?

The Receivables Sale Agreement is a critical document used in Canadian financial transactions where a business wishes to monetize its accounts receivable by selling them to a financial institution or investor. This agreement is commonly used for working capital optimization, funding arrangements, or securitization transactions. The document must comply with Canadian federal and provincial legislation, including the PPSA, tax laws, and privacy regulations. It typically includes detailed provisions about the receivables being sold, purchase price mechanisms, representations about the quality of the receivables, and ongoing servicing arrangements. The agreement is particularly important in establishing a 'true sale' for accounting and legal purposes, distinguishing the transaction from a secured loan. It's essential for businesses seeking to improve their working capital position or establish ongoing financing arrangements based on their receivables.

What sections should be included in a Receivables Sale Agreement?

1. Parties: Identification of the Seller and Purchaser with full legal names and addresses

2. Background: Context of the transaction, nature of the receivables, and purpose of the agreement

3. Definitions: Defined terms used throughout the agreement, including 'Receivables', 'Purchase Price', 'Cut-off Date', etc.

4. Sale and Purchase: Core provisions detailing the sale of receivables, including true sale language and transfer mechanics

5. Purchase Price and Payment: Calculation and payment terms for the receivables, including any adjustments or deductions

6. Conditions Precedent: Conditions that must be satisfied before the sale becomes effective

7. Seller's Representations and Warranties: Warranties about the seller's authority, receivables quality, and absence of encumbrances

8. Purchaser's Representations and Warranties: Basic representations about purchaser's authority and capacity to enter the transaction

9. Covenants: Ongoing obligations of both parties, including notification requirements and documentation

10. Indemnification: Indemnities for breach of representations, warranties, or covenants

11. Term and Termination: Duration of agreement and circumstances allowing termination

12. Confidentiality: Protection of confidential information exchanged during the transaction

13. Notices: Process for formal communications between parties

14. General Provisions: Standard boilerplate including governing law, assignment, amendments, etc.

What sections are optional to include in a Receivables Sale Agreement?

1. Servicing Arrangements: Required if the seller will continue to service the receivables post-sale

2. Future Receivables: Include if the agreement covers receivables not yet in existence

3. Credit Enhancement: Include if there are guarantees, overcollateralization, or other credit support

4. Consumer Protection Provisions: Required if the receivables involve consumer debtors

5. Collection Account Arrangements: Include if specific account arrangements are needed for collections

6. Data Protection: Detailed section required if significant personal data is involved

7. Regulatory Compliance: Specific provisions needed if receivables are in regulated industries

8. Back-up Servicing: Include if a back-up servicer arrangement is required

What schedules should be included in a Receivables Sale Agreement?

1. Schedule of Receivables: Detailed list of all receivables being sold, including key information for each

2. Eligibility Criteria: Specific criteria that receivables must meet to be included in the sale

3. Form of Transfer Notice: Standard form for documenting individual transfers of receivables

4. Purchase Price Calculation: Detailed methodology for calculating the purchase price

5. Servicing Requirements: Detailed servicing standards and requirements if applicable

6. Required Notifications: Forms of notices required to perfect the sale or notify debtors

7. Security Registration Details: PPSA and other registration requirements and forms

8. Form of Bring-Down Certificate: Template for periodic confirmation of representations and warranties

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Genie AI

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Financial Services

Banking

Manufacturing

Retail

Healthcare

Technology

Telecommunications

Energy

Construction

Professional Services

Transportation and Logistics

Consumer Goods

Insurance

Relevant Teams

Legal

Finance

Treasury

Credit and Collections

Risk Management

Compliance

Operations

Accounts Receivable

Commercial

Business Development

Investment

Portfolio Management

Relevant Roles

Chief Financial Officer

Treasury Manager

Finance Director

Legal Counsel

Commercial Director

Credit Manager

Accounts Receivable Manager

Risk Manager

Compliance Officer

Investment Manager

Portfolio Manager

Structured Finance Manager

Operations Director

Financial Controller

Business Development Manager

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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