Vendor Finance Agreement for Nigeria

Vendor Finance Agreement Template for Nigeria

A comprehensive financing agreement governed by Nigerian law that establishes the terms and conditions under which a vendor provides financing to a customer for the purchase of goods, equipment, or services. The agreement includes detailed provisions for interest rates, repayment terms, security arrangements, and collateral requirements in compliance with Nigerian banking and financial services regulations. It incorporates specific provisions required by the Central Bank of Nigeria and addresses local legal requirements for secured transactions and financial services, while providing mechanisms for enforcement and dispute resolution under Nigerian jurisdiction.

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What is a Vendor Finance Agreement?

The Vendor Finance Agreement is a crucial document used in Nigerian commercial transactions where vendors offer financing solutions to customers for the purchase of goods, equipment, or services. This arrangement is particularly relevant in the Nigerian market where access to traditional banking finance may be limited or less favorable. The document must comply with various Nigerian regulations, including the Central Bank of Nigeria Act, Banks and Other Financial Institutions Act (BOFIA), and the Secured Transactions in Movable Assets Act. It typically includes comprehensive details about the financing terms, security arrangements, regulatory compliance requirements, and risk mitigation measures. The agreement is structured to protect both the vendor's interests in securing repayment and the customer's rights under Nigerian consumer protection laws. This type of agreement has become increasingly important in Nigeria's growing economy, particularly in sectors requiring significant capital investment in equipment and machinery.

What sections should be included in a Vendor Finance Agreement?

1. Parties: Identification of the vendor/finance provider and the customer/borrower with full legal details

2. Background: Context of the agreement including the business relationship and purpose of the financing

3. Definitions and Interpretation: Detailed definitions of terms used throughout the agreement and interpretation rules

4. Facility Amount and Purpose: Specification of the financing amount, purpose, and any tranching arrangements

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

6. Drawdown and Disbursement: Conditions and procedures for accessing the financing

7. Repayment Terms: Payment schedule, prepayment provisions, and payment mechanics

8. Security and Collateral: Details of security arrangements, assets pledged, and perfection requirements

9. Representations and Warranties: Standard and transaction-specific representations by both parties

10. Covenants: Positive and negative undertakings by the borrower

11. Events of Default: Circumstances constituting default and consequences

12. Remedies: Rights and remedies available to parties upon default or breach

13. Indemnification: Indemnity provisions and allocation of liabilities

14. Governing Law and Jurisdiction: Nigerian law as governing law and jurisdiction details

15. Notices: Communication procedures and contact details

16. Miscellaneous: Standard boilerplate provisions including amendments, assignments, and severability

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

1. Currency Provisions: Required when financing involves foreign currency, addressing exchange rates and conversion

2. Guarantees: Needed when third-party guarantees are part of the security structure

3. Insurance: Required when specific insurance coverage is mandatory for the financed assets

4. Step-In Rights: Included when lender requires right to take control of financed assets or business

5. Tax Provisions: Detailed tax clauses needed when transaction has specific tax implications

6. Regulatory Compliance: Special provisions for regulated industries or specific CBN requirements

7. Environmental Compliance: Required when financing involves environmentally sensitive activities

8. Anti-Money Laundering: Enhanced provisions when required by transaction size or nature

What schedules should be included in a Vendor Finance Agreement?

1. Schedule 1 - Payment Schedule: Detailed repayment schedule including dates, amounts, and interest calculations

2. Schedule 2 - Conditions Precedent: List of documents and conditions required before drawdown

3. Schedule 3 - Security Details: Comprehensive description of collateral and security arrangements

4. Schedule 4 - Form of Drawdown Notice: Template for drawdown requests

5. Schedule 5 - Financial Covenants: Detailed financial ratios and reporting requirements

6. Appendix A - Asset Schedule: Detailed list of financed assets with descriptions and values

7. Appendix B - Form of Compliance Certificate: Template for periodic compliance reporting

8. Appendix C - Required Insurance: Specification of required insurance coverage

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

Nigeria

Publisher

Genie AI

Document Type

Financing Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Manufacturing

Agriculture

Construction

Technology

Healthcare

Transportation

Energy

Mining

Telecommunications

Retail

Real Estate

Industrial Equipment

Oil and Gas

Relevant Teams

Legal

Finance

Treasury

Risk Management

Commercial

Procurement

Credit

Compliance

Sales

Business Development

Operations

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Commercial Director

Credit Manager

Risk Manager

Treasury Manager

Procurement Manager

Contract Manager

Business Development Manager

Operations Director

Financial Controller

Compliance Officer

Sales Director

Account Manager

Industries
Companies and Allied Matters Act (CAMA) 2020: Primary legislation governing business operations in Nigeria, relevant for establishing the legal status of parties and their capacity to enter into financing agreements
Central Bank of Nigeria Act 2007: Regulates financial transactions and monetary policy in Nigeria, including oversight of credit facilities and financial institutions
Banks and Other Financial Institutions Act (BOFIA) 2020: Governs banking operations and financial services, including rules on credit facilities and financial arrangements
Money Laundering (Prevention and Prohibition) Act 2022: Ensures compliance with anti-money laundering regulations in financial transactions
Secured Transactions in Movable Assets Act 2017: Governs creation and enforcement of security interests in movable assets, crucial for collateral arrangements in vendor financing
Nigerian Contract Law: Based on common law principles, governs the formation and enforcement of contracts, including terms, conditions, and remedies
Recovery of Debts and Financial Malpractices in Banks and Other Financial Institutions Act: Provides framework for debt recovery and handling of financial disputes
Consumer Protection Framework 2016: Protects consumer interests in financial transactions and ensures fair treatment in credit arrangements
Foreign Exchange (Monitoring and Miscellaneous Provisions) Act: Relevant if the vendor financing arrangement involves foreign currency or international transactions
Stamp Duties Act: Requires proper stamping of financial documents and agreements to make them admissible in evidence
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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