Deferment Agreement for India

Deferment Agreement Template for India

A legal document governed by Indian law that formalizes the postponement or rescheduling of existing payment or performance obligations between parties. The agreement modifications existing contractual commitments by establishing new timelines, potentially new terms, and conditions for fulfillment of obligations. It includes specific provisions for interest calculations, default consequences, and enforcement mechanisms in accordance with Indian contract law and regulatory requirements. The document serves as a formal amendment to existing obligations while maintaining the fundamental nature of the original agreement.

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What is a Deferment Agreement?

The Deferment Agreement is a crucial legal instrument used when parties need to modify existing payment or performance obligations due to various circumstances such as financial hardship, business restructuring, or mutual commercial benefit. Commonly used in Indian business and financial transactions, it provides a formal framework for postponing or rescheduling obligations while maintaining legal enforceability. The agreement must comply with Indian contract law, particularly the Indian Contract Act, 1872, and where applicable, RBI guidelines for regulated entities. It typically includes details of the original obligation, new payment/performance schedule, interest calculations, default provisions, and any additional security arrangements. This document is particularly relevant in the current business environment where companies may need flexibility in meeting their contractual obligations while maintaining business relationships.

What sections should be included in a Deferment Agreement?

1. Parties: Identification of all parties to the agreement, including their legal status, registration details, and addresses

2. Background: Recitals explaining the original obligation, reason for deferment, and current status

3. Definitions: Definitions of key terms used in the agreement, including 'Original Agreement', 'Deferred Amount', 'Deferment Period'

4. Original Obligation: Details of the original obligation being deferred, including reference to original agreement and amount

5. Deferment Terms: Specific terms of the deferment including new payment/performance dates and conditions

6. Payment Schedule: Detailed schedule of revised payment dates and amounts (if monetary obligation)

7. Interest and Charges: Provisions regarding any interest or additional charges applicable during the deferment period

8. Representations and Warranties: Statements of fact and promises made by both parties regarding their capacity and authority

9. Default and Consequences: Events of default and their consequences, including acceleration of payments

10. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for disputes

11. Notices: Process and addresses for serving notices under the agreement

What sections are optional to include in a Deferment Agreement?

1. Security Provisions: Include when the deferment requires additional security or guarantees

2. Third Party Rights: Include when guarantors or other third parties have rights under the original agreement

3. Tax Provisions: Include when the deferment has specific tax implications that need to be addressed

4. Force Majeure: Include when specific events might affect the ability to meet deferred obligations

5. Regulatory Compliance: Include when specific regulatory requirements need to be addressed (e.g., RBI guidelines)

6. Assignment: Include when transfer rights need to be specifically addressed

7. Confidentiality: Include when sensitive commercial information is involved

What schedules should be included in a Deferment Agreement?

1. Schedule 1 - Original Agreement: Copy or key terms of the original agreement being deferred

2. Schedule 2 - New Payment Schedule: Detailed breakdown of revised payment dates, amounts, and methods

3. Schedule 3 - Security Details: Details of any security or collateral provided for the deferred obligation

4. Appendix A - Calculation of Interest: Methodology for calculating interest during the deferment period

5. Appendix B - Required Notices: Forms of notices required under the agreement

6. Appendix C - Compliance Certificates: Format for any compliance certificates required during the deferment period

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

India

Publisher

Genie AI

Document Type

Payment Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
Relevant Industries

Banking & Financial Services

Real Estate

Manufacturing

Infrastructure

Retail

Information Technology

Telecommunications

Healthcare

Energy & Utilities

Construction

Education

Relevant Teams

Legal

Finance

Treasury

Credit Control

Compliance

Risk Management

Accounts Receivable

Debt Recovery

Corporate Secretarial

Business Development

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Compliance Officer

Credit Manager

Treasury Manager

Accounts Receivable Manager

Debt Recovery Officer

Risk Manager

Contract Manager

Company Secretary

Financial Controller

Business Development Manager

Relationship 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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