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Account Receivable Purchase Agreement

Account Receivable Purchase Agreement Template for Canada

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Key Requirements PROMPT example:

Account Receivable Purchase Agreement

"I need an Account Receivable Purchase Agreement for a Canadian manufacturing company selling its receivables to a bank, with the seller continuing to service the receivables and including recourse provisions for receivables that are more than 90 days overdue."

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Document background
The Account Receivable Purchase Agreement is essential for businesses in Canada seeking to improve their cash flow through the sale of their accounts receivable. This document is typically used when a company (seller) wishes to sell its receivables to a financial institution or factoring company (purchaser) in exchange for immediate cash, often at a discount. The agreement must comply with Canadian provincial and federal laws, including personal property security legislation, tax regulations, and privacy laws. It contains detailed provisions regarding the purchase price calculation, eligibility criteria for receivables, representations and warranties, servicing arrangements, and remedies in case of default. The document is particularly crucial in factoring arrangements, supply chain finance programs, and other receivables financing structures common in Canadian commercial practice.
Suggested Sections

1. Parties: Identification of the seller and purchaser of the receivables

2. Background: Context of the transaction and business relationship between the parties

3. Definitions: Key terms used throughout the agreement

4. Purchase and Sale: Core transaction terms including purchase price, payment mechanisms, and true sale provisions

5. Eligibility Criteria: Specific requirements for receivables to qualify for purchase

6. Representations and Warranties: Seller's assertions about the receivables and business

7. Purchase Mechanics: Detailed process for identifying, offering, and purchasing receivables

8. Payment Terms: Timing and method of payments, including purchase price calculations

9. Reporting Requirements: Regular reporting obligations of seller regarding receivables performance

10. Covenants: Ongoing obligations of the parties

11. Events of Default: Circumstances constituting default and consequences

12. Remedies: Rights and actions available upon default

13. Indemnification: Obligations to compensate for losses or breaches

14. Term and Termination: Duration of agreement and termination rights

15. Miscellaneous: Standard legal provisions including notices, amendments, governing law

Optional Sections

1. Servicing Arrangements: Used when seller continues to service the receivables post-sale

2. Security Interest: Required if additional security is being granted beyond the receivables

3. Collection Account Provisions: Used when implementing specific collection account arrangements

4. Credit Enhancement: Include when there are additional credit support mechanisms

5. Concentration Limits: Used when establishing limits on receivables from single obligors

6. Recourse Provisions: Include when seller provides certain recourse rights to purchaser

7. Performance Triggers: Used when including early warning or termination triggers based on performance

8. Third Party Rights: Required when other parties have rights in the receivables

Suggested Schedules

1. Schedule A - Eligibility Criteria: Detailed criteria for acceptable receivables

2. Schedule B - Purchase Price Calculation: Formula and methodology for calculating purchase price

3. Schedule C - Form of Purchase Notice: Standard form for offering receivables for purchase

4. Schedule D - Form of Assignment: Legal form for transferring receivables

5. Schedule E - Servicing Requirements: Detailed servicing obligations if applicable

6. Schedule F - Reports: Templates and requirements for regular reporting

7. Schedule G - Existing Security Interests: List of any permitted encumbrances

8. Appendix 1 - Initial Receivables Portfolio: Details of first batch of receivables being purchased

9. Appendix 2 - Approved Obligor List: List of acceptable account debtors if applicable

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈË°æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Relevant legal definitions















































Clauses

































Relevant Industries

Financial Services

Manufacturing

Wholesale Trade

Retail

Technology

Healthcare

Construction

Transportation and Logistics

Professional Services

Energy

Telecommunications

Relevant Teams

Legal

Finance

Treasury

Credit and Collections

Accounts Receivable

Risk Management

Compliance

Operations

Commercial

Business Development

Relevant Roles

Chief Financial Officer

Treasury Manager

Finance Director

Accounts Receivable Manager

Credit Controller

Legal Counsel

Commercial Director

Risk Manager

Collections Manager

Financial Controller

Business Development Manager

Compliance Officer

Industries








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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