Sellers Finance Agreement for Germany

Sellers Finance Agreement Template for Germany

A comprehensive legal agreement governed by German law that establishes the terms and conditions under which a seller provides direct financing to a buyer for the purchase of goods or assets. The document details the financing amount, interest rates, repayment terms, security arrangements, and default provisions in compliance with German banking regulations and civil law requirements. It includes specific protections for both parties and ensures compliance with German consumer protection laws where applicable, while incorporating necessary provisions for enforcement under German jurisdiction.

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What is a Sellers Finance Agreement?

The Seller's Finance Agreement is utilized when a seller wishes to provide direct financing to a buyer for the purchase of goods or assets in Germany. This arrangement is particularly common in situations where traditional bank financing may not be optimal or available, or where the seller wishes to facilitate sales through internal financing options. The document must comply with German banking regulations, civil law requirements, and consumer protection provisions where applicable. It typically includes detailed terms covering the financing amount, interest calculations, repayment schedules, security arrangements, and default remedies. The agreement is structured to protect both parties' interests while ensuring enforceability under German law, with particular attention to documentation requirements and regulatory compliance specific to the German jurisdiction.

What sections should be included in a Sellers Finance Agreement?

1. Parties: Identification of the Seller/Financier and the Buyer/Borrower with full legal details

2. Background: Context of the transaction, including the underlying sale and need for financing

3. Definitions: Key terms used throughout the agreement, including financial and legal terminology

4. Principal Amount and Purpose: Details of the financing amount and its intended use

5. Interest Rate and Calculations: Specification of interest rate, calculation method, and payment periods

6. Repayment Terms: Schedule and methods of repayment, including installment amounts

7. Payment Mechanics: Details of payment procedures, account information, and payment methods

8. Representations and Warranties: Standard declarations by both parties regarding their capacity and authority

9. Borrower Covenants: Ongoing obligations of the borrower during the term of the agreement

10. Events of Default: Circumstances constituting default and their consequences

11. Remedies: Rights and actions available to the seller in case of default

12. Notices: Communication procedures between parties

13. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction

What sections are optional to include in a Sellers Finance Agreement?

1. Security Arrangements: Include when the financing is secured by collateral or guarantees

2. Insurance Requirements: Include when specific insurance coverage is required for financed assets

3. Early Repayment Provisions: Include when early repayment options are offered

4. Assignment and Transfer: Include when rights under the agreement may be transferred

5. Tax Provisions: Include when specific tax implications need to be addressed

6. Force Majeure: Include when protection against unforeseen circumstances is needed

7. Data Protection: Include when personal data processing is involved

8. Third Party Rights: Include when rights of third parties need to be addressed

What schedules should be included in a Sellers Finance Agreement?

1. Repayment Schedule: Detailed amortization table showing payment dates and amounts

2. Asset Description: Detailed description of the asset(s) being financed

3. Security Details: Specifications of any collateral or security arrangements

4. Form of Notices: Standard templates for various notices under the agreement

5. Due Diligence Requirements: List of required documentation and verification procedures

6. Compliance Checklist: Requirements under German banking and financial regulations

7. Calculation Examples: Examples of interest and payment calculations

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

Cost

Free to use

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