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Payment Agreement

Payment Agreement

Each referred to as a “Party” and collectively as the “Parties.”

This Payment Agreement (the “Agreement”)  is entered into and made effective upon signature by both Parties (the “Effective Date”).

WHEREAS, the Debtor owes the  Debtee a certain debt; and

WHEREAS, the Debtee and the Debtor desire to enter into an agreement to memorialize this debt and an associated payment plan.

NOW THEREFORE, in consideration of  the mutual promises, covenants, and conditions contained herein, the Parties agree as follows:

Definitions:

  1. In this Agreement following definitions apply;
  1. “Debtor” means a person or enterprise that owes money to another party.
  2. “Debtee” means one who is owed a debt; a creditor.
  3. “Debt” means an amount of money borrowed by one party from another.

Debt Amount:

  1. The Debtor agrees he/she/it owes the Debtee [INSERT AMOUNT] [Currency, e.g. United States Dollars (USD)].
  1. The Parties hereby agree to the scheduled Payment Plan, found in Exhibit A attached hereto (the "Payment Plan"). The Debtor shall conform to the schedule set and shall pay to the Debtee before or upon due the amount as indicated on the Payments Plan table.

Payment Method:

  1. Payment shall preferably be made to the Debtee in accordance to the mode as indicated in the Payment Plan, but in any case, the Debtor may choose his method of payment to his convenience.

Release and Indemnification:

  1. In consideration for this Agreement, the Debtee hereby releases any other claims against the Debtor in relation to fees and penalties resulting from the deficiency or any damages prior to this Agreement. However, no obligation shall release the Debtor from its obligations herein or limit the rights of the Debtee in relation to this Agreement.

Acceleration Clause: 

  1. In the occurrence that the Debtor fails to render payment upon reaching fifteen (15) days after the scheduled Payment Plan, the full amount of the deficiency shall become due and demandable. Any further failure shall give rise to the right to the Debtee to demand for damages.

Agreement Modifications: 

  1. No modification of this Agreement shall be considered valid unless made in writing and agreed upon by both Parties.

Assignment of Rights :

    8. The Debtee may transfer or assign this Agreement to a third party provided that a written notice to the Debtor is given. In the event of such assignment, the.          assignee may amend the schedule of payment found in this Agreement.

Severability:

  1. Should any provision found in this Agreement be held invalid, illegal, or unenforceable by any competent court, the same shall apply only to the provision and the rest of the remaining provisions hereto shall remain valid and enforceable.

Waiver.

  1. The failure by either Party to exercise any right, power or privilege under the terms of this Agreement will not be construed as a waiver of any subsequent or further exercise of that right, power or privilege or the exercise of any other right, power or privilege.

Legal Fees.

  1. In the event of a dispute resulting in legal action, the successful Party will be entitled to its legal fees, including, but not limited to its attorneys’ fees, collection fees and the like.

Legal and Binding Agreement.

  1. This Agreement is legal and binding in the United States between the Parties as stated above. 

Governing Law and Jurisdiction.

  1. This Agreement shall be governed by and construed in accordance with the laws of the [INSERT NAME OF STATE] in which both Parties reside/do business. In the event that the Parties reside/do business in different States, this Agreement shall be governed by [INSERT NAME OF STATE] law.


IN WITNESS WHEREOF, each of the Parties has executed this Agreement, both Parties by its duly authorized officer, as of the day and year set forth below.

Exhibit A


PAYMENT PLAN 

Exhibit A

Note: INSERT BELOW RELEVANT PAYMENT METHOD 


Payment Method:

Check [INSERT METHOD]

Card

Credit

Amount:

$ [INSERT AMOUNT]

Scheduled Date:

[INSERT DATE]



What is a Payment Agreement?

A Payment Agreement is a document you can use to outline the terms and conditions of a loan. You may use it instead of a Loan Agreement or alongside that document to ensure both parties are clear on their obligations regarding the repayment of a loan.

Payment Agreements are legally binding documents. As such, missing payments or otherwise failing to abide by its terms and conditions could see either party held in breach of contract and court action taken against them.

Payment Agreements can also act as a receipt for payments that have been made or scheduled and be a helpful communication tool between all parties involved in a loan.

What should be included in a Payment Agreement?

Your Payment Agreement should be relatively short and to the point and include the following essential information:

  • Both parties’ details. Who is owed the money, and who is repaying the money? Include addresses and contact details so any disputes can be resolved swiftly.
  • The amount owed. How much is owed at the point the agreement is signed? Depending on how you use this agreement, you might provide an updated version each time a payment has been made to reflect the new amount outstanding. Still, it is up to you and the other party whether you see this as necessary.
  • Governing law. Under what jurisdiction will the Payment Agreement be governed?
  • Payment plan details. You can use these, which you will find at the bottom of our template, either as a receipt type document or to detail the amount that should be paid, and how and when it should be paid. Add the preferred or actual payment method, the amount required or received, and the date it is expected or received. It is also a good idea to add a reference number to easily track whether you receive the cash on time.

When should I use a Payment Agreement?

Use a Payment Agreement if you are:

  • Planning to lend money to another business or an individual
  • Planning to borrow money from another company or an individual
  • Need to settle an existing debt and want to agree on a payment schedule outside of what was detailed in the original Loan Agreement
  • Want to track payments made by or to your business concerning a loan

Why use a Payment Agreement?

Using a Payment Agreement can help both parties be clear on how and when payments should be made, while also giving visibility on the overall loan term and what proportion of payments consist of principal and interest. A Payment Agreement can also be helpful if you wish to create an amortization table for factoring payments in or out into your business accounts.

Using a Payment Agreement is an excellent way of simplifying elements of the loan process and can help both parties stay organized.

Where and how to use a Payment Agreement?

Use Contractbook’s Payment Agreement template in conjunction with our Loan Agreement where necessary to help ensure all parties are clear on what payments need to be made and when.

Sign up to Contractbook to get full access to our Payment Agreement and other templates and the ability to edit and tailor them 100% to your needs.


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