Third Party Collateral Agreement for the United Kingdom

Third Party Collateral Agreement Template for England and Wales

A Third Party Collateral Agreement under English and Welsh law is a legally binding document where a third party provides security for another party's obligations. The agreement establishes the terms under which collateral is provided, including the nature of the security interest, enforcement rights, and obligations of all parties. It is governed by English law principles of security and financial collateral arrangements, incorporating requirements under the Financial Collateral Arrangements Regulations and other relevant legislation.

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What is a Third Party Collateral Agreement?

A Third Party Collateral Agreement is utilized when one party wishes to provide security for another party's obligations to a creditor. This arrangement is common in corporate group structures, joint ventures, or family business arrangements. The agreement, governed by English and Welsh law, details the nature of the collateral, the secured obligations, enforcement mechanisms, and the rights and obligations of all parties. It must comply with the Financial Collateral Arrangements (No. 2) Regulations 2003 and other relevant legislation to ensure enforceability.

What sections should be included in a Third Party Collateral Agreement?

1. Parties: Identification of all parties including collateral provider, secured party, and third party

2. Background: Context of the agreement and relationship between parties

3. Definitions: Key terms used throughout the agreement including definitions from relevant legislation

4. Grant of Security Interest: Core provisions creating the security interest in compliance with Financial Collateral Arrangements Regulations

5. Representations and Warranties: Statements of fact and assurances from parties regarding authority, ownership, and compliance

6. Covenants: Ongoing obligations of the parties including maintenance and preservation of collateral

7. Enforcement: Rights and procedures following default, including remedies and realization of collateral

What sections are optional to include in a Third Party Collateral Agreement?

1. Cross-Border Provisions: Additional provisions for transactions involving multiple jurisdictions or foreign collateral

2. Regulatory Compliance: Specific provisions required when any party is regulated by FCA/PRA

3. Consumer Protection Provisions: Additional protections and compliance requirements when involving individual parties

What schedules should be included in a Third Party Collateral Agreement?

1. Schedule 1 - Description of Collateral: Detailed specification of assets subject to security interest

2. Schedule 2 - Form of Notices: Standard forms for notifications required under the agreement

3. Schedule 3 - Perfection Requirements: Specific steps required to perfect the security interest in different jurisdictions

4. Schedule 4 - Powers of Attorney: Standard form powers of attorney for enforcement and perfection actions

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

England and Wales

Publisher

Genie AI

Document Type

Security Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Industries

Financial Collateral Arrangements (No. 2) Regulations 2003: Key EU-derived legislation that governs financial collateral arrangements in the UK, implementing EU Directive 2002/47/EC. Covers the creation, perfection and enforcement of security interests in financial collateral.

Law of Property Act 1925: Foundational legislation establishing fundamental principles regarding property rights and security interests, including requirements for creation of legal charges.

Companies Act 2006: Primary legislation governing company law in the UK, including registration requirements for company charges and corporate capacity and authority requirements.

Insolvency Act 1986: Legislation governing insolvency proceedings and their impact on security interests, including anti-deprivation principles and treatment of secured creditors.

Financial Services and Markets Act 2000: Principal legislation for financial services regulation in the UK, including regulatory requirements for regulated entities and FCA/PRA compliance obligations.

Consumer Credit Act 1974: Legislation protecting consumer interests in credit arrangements, relevant if any party to the agreement might be considered a consumer.

Contract Law Principles: Common law principles governing formation and enforcement of contracts, including offer, acceptance, consideration, and contractual interpretation.

Equity Principles: Common law principles regarding security interests, including equitable charges and mortgages, and remedies available to secured parties.

Priority Rules: Legal principles determining the ranking and priority of competing security interests over the same collateral.

Conflict of Laws: Principles determining which jurisdiction's laws apply to cross-border transactions and the recognition and enforcement of foreign security interests.

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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