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A monetary obligation owed by one person to another in payment for the supply of goods or services.
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Taking security—fixed charge—checklist Scope of this Checklist This Checklist sets out the factors to consider when a company is proposing to grant a fixed charge. It assumes that an English or Welsh company will be granting a number of fixed charges to a lender situated in England or Wales. In this Checklist: • the company granting the fixed charge is called the 'chargor' • the entity to which the charge is granted is called the 'chargee', and • the document containing the fixed charge is called the 'security document' Fixed charges can be granted in a standalone security document or form part of the security created by a debenture (see: Documentation required to create a fixed charge below). For more information, see: Practice Note: Fixed and floating charges. Preliminary questions before taking security by way of a fixed charge • Is a fixed charge the appropriate method of taking security? ◦ A fixed charge can be granted by a company, limited liability partnership and other bodies corporate. It can also...
Drafting and negotiating a novation—checklist This Checklist sets out the key issues and provisions to consider when drafting and negotiating the novation of a contract to a third party. For a precedent novation, see Precedents: • Novation agreement—long form • Novation agreement—short form • Deed of novation—long form • Deed of novation—short form • Short form letter of novation For information on novation generally, see: • Practice Note: Novation—why and how to novate a contract • Third parties, subcontracting and transfers—overview For guidance on novation in the specific context of the construction industry, see: Novation in construction projects—overview. Note that for contracts novated on or after 31 December 2018, the Business Contract Terms (Assignment of Receivables) Regulations 2018, SI 2018/1254 may render ineffective any restrictions on the assignment of receivables. For more information, see the drafting notes and optional clauses in Precedent: Assignment clause, News Analysis: Updated draft regulations on business contract terms and News Analysis: Back for good—new Business Contract Terms (Assignment of Receivables Regulations) 2018. The regulations as...
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This Practice Note gives a brief overview of the key legal issues and discussion points commonly encountered when asset-based lenders are deciding whether to offer receivables purchase/invoice discounting facilities or to provide a loan secured against the value of receivables.There are fundamental differences between buying receivables (also known as debts) and lending on the security of receivables. Asset-based lenders in the UK have historically used invoice discounting facilities, which involve the purchase of receivables, to provide advances against the purchase price of those receivables and this is still the most common funding structure in the UK.Under an invoice discounting facility, in consideration for payment of the purchase price, the asset-based lender receives title to the receivable, together with any ancillary rights related to that receivable, which can include, where the receivable relates to the sale of goods to the debtor, the right to returned goods and the right to repossess goods under retention of title provisions.No rights are retained by the assignor in respect of the receivable. In particular, there...
In commercial lending transactions receivables are typically offered as security:•as part of a package of security over the whole of a company's assets (see Practice Note: Key features of debentures), and•in transactions where a steady stream of receivables forms a major part of the borrower's assets and the lender wants to control that income stream (for example, where the borrower is a company which provides goods and services to third parties)This Practice Note explains the key issues which arise when taking security over receivables.For information on taking security over other types of intangible assets see Practice Notes:•Taking security over insurance policies, and•Taking security over intellectual property rightsThis Practice Note focuses on receivables, but more general information on taking security over contractual rights can be found in Practice Note: Taking security over contractual rights.For specific information on receivables financings, see Practice Note: Invoice discounting and factoring.Nature of receivablesIn broad terms, a receivable is the right to receive the payment of money which is enforceable by legal action. Receivables are a type...
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Assignment Consultant’s appointment 1 The Consultant shall not assign the benefit of and/or any rights under this Agreement to any person without the prior written consent of the Employer. 2 The Employer may assign, charge or transfer the benefit of and/or any rights under this Agreement without the consent of the Consultant being required: 2.1
Escrow Agreement Date [insert date of Agreement] Parties 1 [insert name of Employer] of [insert address] [incorporated in England and Wales with company registration number] [insert company registration number] (the 'Employer') 2 [insert name of Contractor] of [insert address] [incorporated in England and Wales with company registration number] [insert company registration number] (the 'Contractor') 3 [insert name of firm] of [insert address] [a limited liability partnership] (the 'Escrow Holder') Whereas (A) The Employer [has entered into OR intends to enter into] a contract with the Contractor for the [design and] construction of [insert brief description of the project] at [insert location of site] (the 'Building Contract'). (B) The Employer has agreed to deposit a sum of money in a designated interest-bearing account in accordance with the provisions of this agreement as security for payment to the Contractor under the Building Contract. (C) The Escrow Holder has agreed to hold the deposit and operate the designated interest-bearing account in accordance with the terms of this...
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If book debts are expressed to be subject to certain controls by the lender in a debenture, but the lender does not appear to have exercised these controls, is there a risk that the book debts could be recharacterised as a floating charge rather than a fixed charge? The case of National Westminster Bank plc v Spectrum Plus Limited is the leading case on taking security over book debts. In that case, the House of Lords reached the clear conclusion, approving Lord Millett's conclusions in Agnew v Commissioner of Inland Revenue (also known as Re Brumark) that the critical issue in determining whether a charge over book debts is fixed or floating is not whether the debenture creating the charge contains a prohibition on drawings from an account to which the proceeds of such book debts are credited but whether after the debenture is executed, the account is actually operated as a blocked account. The House of Lords held that the bank's security...
Can you give upfront consent or set certain criteria in advance for the release of assets from a fixed charge without compromising that fixed charge? The key characteristic of a fixed charge is that the security holder exercises a certain level of control over the charged asset preventing the security provider from doing anything to take the asset outside of the scope of the security. The issue here is whether the security holder, by giving an advance consent to release, even subject to criteria, forgoes control and allows the security provider to remove the asset from the ambit of the security in a way that turns the fixed into a floating security interest. What level of control is necessary? The practical difficulty in giving definitive advice on this issue is that in the leading case on re-characterisation of a fixed charge; National Westminster Bank plc v Spectrum Plus Limited, the judges gave no guidance on the level of control that it was necessary for a...
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Law360, London: Administrators overseeing part of the collapse of Lex Greensill's empire will head to trial in October 2027 to seek US$400m from a Swiss insurance company that has accused the financier and one of his major former clients, Sanjeev Gupta, of fraud.
Dispute Resolution analysis: This case provides an analysis of asymmetrical jurisdiction clauses in the context of a dispute arising from the sale of the back catalogue of Mr Barry Manilow. It serves as a reminder that the jurisdiction of the English Courts is determined at the date of issue of proceedings. The concept that the English court had jurisdiction when the proceedings were issued, but that was ‘floating’ and was lost in favour of California when the option to sue there was exercised, was heretical and contrary to authority. Written by Georgia Whiting, in-house legal counsel, at Ardmore Group Ltd.
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