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The Factoring Agreement serves as a crucial financial instrument in the Nigerian market, enabling businesses to improve their working capital position by monetizing their accounts receivable. This document is essential when a business wishes to sell its receivables to a financial institution in exchange for immediate funding. The agreement encompasses all necessary provisions required under Nigerian law, including compliance with Central Bank of Nigeria regulations and other relevant financial legislation. It details the relationship between the Factor and Client, specifying the terms of purchase, collection rights, recourse provisions, and security arrangements. The document is particularly valuable for businesses seeking alternative financing solutions outside traditional banking arrangements and is structured to protect all parties' interests while ensuring regulatory compliance.

1. Parties: Identification of the Factor and the Client (Seller of receivables)

2. Background: Context of the agreement and brief description of the factoring arrangement

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

4. Assignment of Receivables: Core provisions regarding the transfer of receivables from Client to Factor

5. Purchase Price and Payment Terms: Pricing structure, advance rate, reserves, and payment mechanisms

6. Eligibility Criteria: Criteria for acceptable receivables and excluded receivables

7. Representations and Warranties: Client's representations regarding business, receivables, and compliance

8. Covenants: Ongoing obligations of the Client throughout the agreement term

9. Security and Collateral: Security arrangements supporting the factoring relationship

10. Operating Procedures: Day-to-day procedures for submission, verification, and collection of receivables

11. Events of Default: Circumstances constituting default and consequences

12. Termination: Terms and procedures for ending the agreement

13. Indemnification: Mutual indemnification obligations

14. Confidentiality: Protection of confidential information

15. Governing Law and Jurisdiction: Nigerian law as governing law and jurisdiction for disputes

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