The Prepayment Agreement is commonly used in Philippine business transactions where one party needs to make advance payments for future goods, services, or other obligations. This document type is particularly relevant in scenarios involving large commercial transactions, construction projects, supply agreements, or service contracts where advance funding is required. The agreement must comply with Philippine Civil Code requirements for valid contracts and incorporate relevant financial regulations, including those under the New Central Bank Act and Anti-Money Laundering laws. It typically includes detailed payment mechanics, security arrangements, and conditions precedent that must be satisfied before the prepayment obligation becomes effective. The document is essential for protecting both parties' interests while ensuring clear documentation of the prepayment arrangement and associated obligations under Philippine law.

1. Parties: Identifies and provides full details of all parties to the agreement

2. Background: Sets out the context and commercial intent behind the prepayment arrangement

3. Definitions: Defines key terms used throughout the agreement

4. Prepayment Amount and Terms: Specifies the prepayment amount, payment schedule, and related financial terms

5. Conditions Precedent: Lists conditions that must be satisfied before the prepayment obligation becomes effective

6. Payment Mechanics: Details the process and method of making prepayments, including bank account details and payment procedures

7. Security: Outlines any security arrangements or guarantees for the prepayment

8. Representations and Warranties: Contains statements of fact and assurances from both parties

9. Covenants: Sets out ongoing obligations of the parties during the agreement term

10. Events of Default: Lists circumstances that constitute default and corresponding remedies

11. Termination: Specifies how and when the agreement can be terminated

12. Governing Law and Jurisdiction: Confirms Philippine law as governing law and specifies jurisdiction for disputes

13. General Provisions: Standard boilerplate clauses including notices, amendments, and assignment