The Prepayment Agreement is essential in commercial transactions where one party needs to make advance payments to another, typically for future goods, services, or other obligations. This document is particularly relevant under Hong Kong law, where significant international trade and commercial transactions often require structured prepayment arrangements. The agreement provides legal certainty by clearly defining the terms of the prepayment, including amount, timing, use restrictions, and application method. It incorporates necessary safeguards and compliance measures aligned with Hong Kong financial regulations and commercial practice. The document is commonly used in manufacturing contracts, large-scale service agreements, and international trade transactions where advance funding is required to secure performance or manage cash flow requirements.
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1. Parties: Identification of the parties entering into the prepayment agreement
2. Background: Context of the prepayment arrangement and commercial relationship between the parties
3. Definitions and Interpretation: Key terms used throughout the agreement and rules of interpretation
4. Prepayment Amount and Purpose: Specification of the prepayment amount and its intended use
5. Payment Terms: Details of how and when the prepayment will be made
6. Use of Prepayment: Restrictions and conditions on how the prepayment can be used
7. Repayment or Application: Terms governing how the prepayment will be applied to future obligations or repaid
8. Representations and Warranties: Standard and specific representations made by both parties
9. Undertakings: Ongoing obligations of the parties during the term of the agreement
10. Events of Default: Circumstances that constitute default and consequences
11. Termination: Circumstances and process for ending the agreement
12. Notices: How formal communications between parties should be made
13. General Provisions: Standard boilerplate clauses including governing law, assignment, and amendments
1. Interest: Terms for interest on the prepayment amount, if applicable
2. Security: Details of any security or collateral provided for the prepayment
3. Multiple Drawdown Provisions: If the prepayment is to be made in multiple installments
4. Set-off Rights: Rights to set off the prepayment against other obligations
5. Tax Provisions: Allocation of tax liabilities and withholding obligations
6. Currency Provisions: If prepayment involves multiple currencies or exchange rate considerations
7. Force Majeure: Provisions for handling unforeseen circumstances affecting the agreement
1. Payment Schedule: Detailed schedule of payment amounts and dates
2. Calculation of Interest: Method and examples of interest calculations if applicable
3. Form of Drawdown Notice: Template for requesting installments of the prepayment
4. Form of Utilization Request: Template for requesting use of prepaid amounts
5. Security Documents: Forms of any security documents required
6. Contact Details: List of authorized representatives and contact information
7. Conditions Precedent Documents: List of required documents and conditions to be satisfied before prepayment
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