Trade Credit Agreement for Singapore

Trade Credit Agreement Template for Singapore

A Trade Credit Agreement under Singapore law is a legally binding document that establishes the terms and conditions for the provision of credit facilities between trading partners. It outlines credit limits, payment terms, security arrangements, and default provisions, incorporating Singapore's robust commercial law framework and regulatory requirements. The agreement typically includes provisions for interest calculations, enforcement mechanisms, and compliance with local banking and securities regulations.

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What is a Trade Credit Agreement?

A Trade Credit Agreement is essential for businesses seeking to establish formal credit arrangements with their trading partners in Singapore. This document is particularly relevant when companies require working capital facilities, supplier credit, or other forms of trade financing. The agreement must comply with Singapore's comprehensive commercial and banking regulations, including the Civil Law Act and Securities and Futures Act. It typically covers credit limits, payment schedules, security arrangements, and default remedies, while incorporating specific requirements of Singapore's legal framework regarding contract formation and enforcement.

What sections should be included in a Trade Credit Agreement?

1. Parties: Identification and details of the credit provider and recipient

2. Background: Context of the trade credit arrangement and relationship between parties

3. Definitions: Key terms used throughout the agreement including credit facility, security, events of default

4. Credit Facility Terms: Amount, duration, and nature of the credit facility including credit limits and utilization methods

5. Interest and Fees: Interest rates, calculation methods, and applicable fees including late payment charges

6. Payment Terms: Payment schedule, methods, currencies and conditions for repayment

7. Security: Details of any collateral, guarantees or other security arrangements required

8. Events of Default: Circumstances constituting default and consequences of default

9. Representations and Warranties: Standard declarations made by both parties regarding their capacity and authority

10. Termination: Conditions for ending the agreement and consequences of termination

What sections are optional to include in a Trade Credit Agreement?

1. Insurance Requirements: Specific insurance coverage requirements for high-value credit facilities or industry-specific needs

2. Cross-Border Provisions: Additional terms for international trade and cross-border transactions

3. Group Company Guarantees: Additional corporate guarantees when dealing with corporate groups

4. Compliance Requirements: Specific regulatory compliance obligations and reporting requirements

What schedules should be included in a Trade Credit Agreement?

1. Schedule 1 - Credit Facility Details: Detailed breakdown of credit terms, limits and utilization methods

2. Schedule 2 - Security Documents: Details of security arrangements, guarantees and supporting documentation

3. Schedule 3 - Payment Schedule: Detailed repayment schedule including calculation methodologies

4. Schedule 4 - Financial Covenants: Specific financial requirements and ratios to be maintained by the borrower

5. Schedule 5 - Form of Drawdown Notice: Standard template for requesting credit utilization 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

Jurisdiction

Singapore

Publisher

Genie AI

Document Type

Financing Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Industries

Civil Law Act (Cap. 43): Primary legislation governing contract formation, enforcement, and remedies in Singapore

Unfair Contract Terms Act (Cap. 396): Regulates unfair terms in contracts and limits the extent to which civil liability can be excluded in contracts

Securities and Futures Act (Cap. 289): Regulates securities, futures, and derivatives markets, including related financing arrangements

Banking Act (Cap. 19): Governs banking operations and credit facilities provided by banks in Singapore

Moneylenders Act (Cap. 188): Regulates moneylending activities and credit facilities provided by non-bank entities

Sale of Goods Act (Cap. 393): Governs contracts relating to the sale of goods and associated credit arrangements

Bills of Exchange Act (Cap. 23): Regulates negotiable instruments often used in trade credit transactions

Insolvency, Restructuring and Dissolution Act 2018: Governs corporate insolvency and debt restructuring, crucial for credit risk management

Companies Act (Cap. 50): Regulates company operations including corporate borrowing and security arrangements

MAS Guidelines: Regulatory guidelines issued by the Monetary Authority of Singapore affecting credit facilities and financial institutions

Personal Data Protection Act 2012: Governs the collection, use, and disclosure of personal data in credit agreements

UNCITRAL Model Laws: International trade law framework relevant for cross-border trade credit arrangements

ICC Rules: International Chamber of Commerce rules providing standards for international trade and finance

Corruption, Drug Trafficking and Other Serious Crimes Act: Anti-money laundering legislation affecting credit transactions and due diligence requirements

Terrorism (Suppression of Financing) Act: Regulations preventing terrorism financing, affecting credit screening and compliance requirements

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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