OverLine Of Credit Agreement Template for England and Wales

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Key Requirements PROMPT example:

Overdraft Line Of Credit Agreement

Need an Overdraft Line of Credit Agreement for a medium-sized manufacturing company, with a Â£500,000 facility limit and standard security package, to be put in place by March 2025.

Document background

An Overdraft Line Of Credit Agreement is essential when establishing flexible borrowing arrangements under English and Welsh law. This document is used when a lender agrees to provide a borrower with the ability to overdraw their account up to a specified limit. It contains crucial terms including credit limits, interest calculations, fees, repayment obligations, and default provisions. The agreement ensures compliance with UK banking regulations and consumer protection laws, providing legal certainty for both parties while establishing clear operational parameters for the facility.

Suggested Sections

1. Parties: Identification and details of the lender and borrower

2. Background: Context and purpose of the overdraft facility

3. Definitions: Key terms and their meanings used throughout the agreement

4. Facility Terms: Core terms including amount, duration, and purpose of the overdraft facility

5. Interest and Fees: Details of interest rates, calculation methods, and all applicable fees

6. Repayment Terms: Conditions and timing of repayment, including minimum payments

7. Events of Default: Circumstances constituting default and consequences thereof

8. Representations and Warranties: Statements of fact and assurances given by the borrower

9. Covenants: Ongoing obligations of the borrower during the term of the facility

10. Termination: Circumstances and procedures for terminating the facility

Optional Sections

1. Security: Details of any collateral or guarantees required for securing the facility

2. Insurance Requirements: Specific insurance coverage requirements for the borrower

3. Special Drawing Conditions: Additional conditions that must be met before drawings under the facility

4. Change of Circumstances: Provisions dealing with material changes affecting the facility

Suggested Schedules

1. Fee Schedule: Detailed breakdown of all fees, charges, and their calculation methods

2. Interest Rate Schedule: Detailed information about interest rates, calculation periods, and variation mechanisms

3. Conditions Precedent: List of conditions that must be satisfied before the facility becomes available

4. Form of Drawing Notice: Template for requesting drawings under the facility

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

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Banking and Financial Services
Retail
Manufacturing
Professional Services

Relevant Teams

Finance
Treasury
Legal
Credit Risk
Operations

Relevant Roles

Chief Financial Officer
Treasury Manager
Financial Controller
Credit Manager
Relationship Manager

Industries

Consumer Credit Act 1974: Primary legislation governing consumer credit agreements, including overdrafts, when the borrower is a consumer. Sets out requirements for credit agreements, licensing, and consumer protections.

Financial Services and Markets Act 2000: Establishes the regulatory framework for financial services in the UK, including the powers of the FCA and PRA in regulating banking and credit services.

Consumer Rights Act 2015: Consolidates consumer rights legislation and provides protection against unfair terms in consumer contracts, including financial services agreements.

Unfair Contract Terms Act 1977: Controls the use of unfair terms in contracts, particularly exclusion and limitation clauses, applicable to both business and consumer agreements.

FCA Handbook - CONC: Consumer Credit Sourcebook - Contains detailed rules and guidance for firms offering consumer credit, including requirements for overdraft facilities.

FCA Handbook - BCOBS: Banking Conduct of Business Sourcebook - Sets out rules and guidance for retail banking services, including overdraft facilities.

PRA Rulebook: Contains prudential requirements for banks and credit institutions, including capital and liquidity requirements relevant to lending activities.

Basel III Requirements: International regulatory framework for banks, setting standards for capital adequacy, stress testing, and market liquidity risk.

Consumer Protection from Unfair Trading Regulations 2008: Prohibits unfair commercial practices between traders and consumers, including misleading actions or omissions in financial services.

UK GDPR and Data Protection Act 2018: Governs the processing of personal data, including requirements for collecting and handling customer information in banking relationships.

Money Laundering Regulations 2017: Sets out requirements for customer due diligence, risk assessment, and monitoring to prevent money laundering through banking services.

Proceeds of Crime Act 2002: Creates obligations regarding money laundering prevention and reporting of suspicious activities in banking relationships.

Financial Services (Banking Reform) Act 2013: Implements structural reforms to the banking sector and enhances financial stability requirements.

Payment Services Regulations 2017: Regulates payment services, including aspects of overdraft facilities when connected to payment accounts.

FCA Treating Customers Fairly Principles: Core principles requiring firms to put customers' interests at the heart of their business model and treat them fairly.

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