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Vendor Finance Contract Template for Nigeria

A comprehensive legal 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 document outlines the financial arrangement, including the facility amount, interest rates, repayment terms, security arrangements, and obligations of all parties involved. It incorporates relevant provisions from Nigerian financial regulations, including the Banks and Other Financial Institutions Act (BOFIA) and the Secured Transactions in Movable Assets Act, while establishing clear mechanisms for enforcement and dispute resolution under Nigerian jurisdiction.

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What is a Vendor Finance Contract?

The Vendor Finance Contract serves as a crucial legal instrument in Nigerian commercial transactions where vendors offer financing solutions to customers for purchasing goods, equipment, or services. This document type is particularly relevant in scenarios where traditional banking finance may be less accessible or when vendors aim to facilitate sales through direct financing arrangements. The contract must comply with Nigerian financial regulations, including the Banks and Other Financial Institutions Act (BOFIA), Central Bank of Nigeria guidelines, and relevant securities legislation. It typically includes detailed provisions for the facility amount, interest calculations, security arrangements, conditions precedent, and enforcement mechanisms. The document is designed to protect both the vendor's financial interests and the customer's rights while ensuring compliance with Nigerian commercial law and financial regulations.

What sections should be included in a Vendor Finance Contract?

1. Parties: Identification of the vendor (finance provider) and the customer, including full legal names, registration details, and addresses

2. Background: Context of the financing arrangement, relationship between parties, and purpose of the agreement

3. Definitions and Interpretation: Detailed definitions of terms used in the agreement and rules for interpreting the contract

4. Facility Amount and Purpose: Specification of the financing amount, purpose, and any restrictions on use

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

6. Repayment Terms: Payment schedule, payment methods, and prepayment provisions

7. Security and Collateral: Description of security arrangements, collateral requirements, and perfection requirements

8. Conditions Precedent: Conditions that must be satisfied before the facility becomes available

9. Representations and Warranties: Statements of fact and assurances given by the customer

10. Covenants: Positive and negative obligations of the customer during the facility period

11. Events of Default: Circumstances constituting default and consequences thereof

12. Enforcement Rights: Rights and remedies of the vendor in case of default

13. Governing Law and Jurisdiction: Specification of Nigerian law as governing law and jurisdiction for disputes

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

1. Insurance Requirements: Required when specific insurance coverage is needed for financed assets

2. Guarantees: Include when personal or corporate guarantees are required as additional security

3. Assignment and Transfer: Include when either party may need to transfer rights or obligations

4. Force Majeure: Include for long-term financing arrangements to address unforeseen circumstances

5. Anti-Money Laundering Provisions: Required for high-value transactions or when dealing with regulated entities

6. Electronic Communications: Include when parties agree to use electronic means for notices and communications

7. Tax Provisions: Include detailed tax provisions when complex tax implications exist

What schedules should be included in a Vendor Finance Contract?

1. Payment Schedule: Detailed breakdown of payment dates, amounts, and interest calculations

2. Asset Schedule: Description and valuation of financed assets or equipment

3. Security Documents: Forms of security documents, guarantees, or collateral agreements

4. Conditions Precedent Documents: List of required documents and evidence for conditions precedent

5. Form of Drawdown Notice: Template for requesting disbursement of funds

6. Financial Covenants: Detailed financial ratios and reporting requirements

7. Permitted Security Interests: List of pre-approved security interests or liens

8. Insurance Requirements: Detailed insurance specifications and requirements

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Nigeria

Publisher

Ƶ

Document Type

Financing Agreement

Cost

Free to use

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