Customer Agreement with Security Provisions (aka Commercial Credit Line Agreement)

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Customer Agreement with Security Provisions (aka Commercial Credit Line Agreement) is between a financial institution and an individual or business who desires to open a line of credit.

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This Customer Agreement with Security Provisions (also known as Commercial Credit Line Agreement) is between a financial institution or other entity (the “Lender”) and an individual/business who desires to open a commercial line of credit (the “Borrower”). A commercial line of credit allows a Borrower to purchase products, property, or services from third parties with funds obtained from the Lender. In exchange for the funds, the borrower promises to pay back such funds with interest and commission at specified times (as designated by the Agreement or drafts made under the Agreement).

This Agreement also includes security and collateral provisions, which provide the Lender with additional protections should the Borrower fail to pay back the funds in a timely fashion. Such protections include rights to property received or shipped under the line of credit.

This Customer Agreement with Security Provisions (also known as Commercial Line Credit Line Agreement) includes:
  • Payment: Sets forth that payments are due, upon demand, at the institution's principal office;
  • Commission: Sets forth that in addition to interest or other charges, a commission in a specific percentage will be paid;
  • Grant of Security Interest: A security interest is granted in all property which is shipped pursuant to this agreement;
  • Sale of Collateral: In the event of default, any collateral will be sold without advertisement or notice;
  • Licenses: All necessary import, export or other licenses will be procured;
  • Signature: This agreement must be signed by both parties in front of a notary public.

Protect your rights and your company by using our attorney-prepared forms.

This attorney-prepared packet contains:
  1. General Information
  2. Instructions and Checklist
  3. Customer Agreement with Security Provisions (also known as Commercial Credit Line Agreement)
State Law Compliance: This form complies with the laws of all states
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.











Customer Agreement with
Security Provisions
(also known as a
Commercial Credit Line Agreement)










This Packet Includes:
1.  General Information
2.  Instructions and Checklist
3.  Customer Agreement with Security Provisions  
     aka Commercial Credit Line Agreement








General Information
Customer Agreement with Security Provisions
aka Commercial Credit Line Agreement

This Customer Agreement with Security Provisions (aka Commercial Credit Line Agreement) is between a financial institution or other entity (the “Lender”) and an individual/business who desires to open a commercial line of credit (the “Borrower”).  A commercial line of credit allows a Borrower to purchase products, property, or services from third parties with funds obtained from the Lender.  In exchange for the funds, the borrower promises to pay back such funds with interest and commission at specified times (as designated by the Agreement or drafts made under the Agreement).  

This Agreement also includes security and collateral provisions, which provide the Lender with additional protections should the Borrower fail to pay back the funds in a timely fashion.  Such protections include rights to property received or shipped under the line of credit.

  



Instructions and Checklist


Customer Agreement with Security Provisions

   The parties should read and review the agreement carefully.  Alter any provision that does not accurately reflect the agreement between the parties.  Remember this form is the starting point for your agreement.  No one agreement fits all situations.

   Insert all requested information in the spaces provided on the form.

     Both parties must sign the agreement.

   Both parties should retain either an original or copy of the signed agreement.

   All legal documents should be kept in a safe location such as a fireproof safe or safe deposit box.  



   




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    CUSTOMER AGREEMENT WITH SECURITY PROVISIONS

In consideration of your opening at our request a commercial letter of credit (referred to as the "letter of credit"), we agree as follows:

1.   Payment on Demand

As to each draft under the letter of credit, whether sight or time, we shall, at your principal office at ______, ______, ______ ______ pay you on demand the amount paid on the draft.

2.   Timing of Payments

As to each time draft, we shall make such payment sufficiently in advance of its maturity date to enable you to arrange (in the usual course of the mails) for cover to reach the place where the time draft is payable, but in any event not later than one business day prior to its maturity, it being understood that you will notify us of the amount and date of maturity of each such time draft.

3.   Foreign Currencies

We shall pay you on demand, at your head office and in United States currency, the equivalent (at your then selling rate for cable transfers to the place where and in the currency in which the draft is payable) of the amount of each draft (whether sight or time) which may be drawn in other than United States currency under the letter of credit.  In any event, and without demand, we shall effect such payment with respect to each time draft sufficiently in advance of its maturity date to enable you to arrange (in the usual course of the mails) for cover to reach the place where the time draft is payable, but in any event not later than one business day prior to maturity.  Alternatively, we shall, at your option, provide you then with the amount of currency in which the time draft is payable, in such form and manner as shall be agreeable to you, it being understood that (a) you will notify us of the amount and date of maturity of each such time draft; and (b) we will comply with any and all governmental exchange regulations now or hereafter applicable to any foreign exchange provided you pursuant to this Paragraph, and will indemnify and hold you harmless from any failure to so comply.

4.   Payment of Acceptances

In the event of any United States currency drafts being drawn by us on you to finance any obligations set forth in Paragraphs 1, 2, and 3 of this Agreement, and the drafts are accepted by you, at your option, we shall pay you on demand, but in any event not later than one business day prior to its maturity, the amount of each such acceptance.  It is understood that each amount that may become due and payable to you under this Agreement may, in your discretion and if not otherwise paid, be charged by you to any available funds then held by you for our account.

5.   Commission

In addition to any interest and other charges and expenses paid or incurred by you under the letter of credit, we shall pay to you, on the first day of the next succeeding month, a commission of ______% per month on that part of the letter of credit that is used and ______% per month on that part of the letter of credit that remains unused as of the day of the immediately preceding month, or an aggregate total of $______ per month, whichever is greater.

6.   Delivery of Documents Prior to Presentation of Draft

If you receive some, but not all of the documents against which drawings, by any method, may be made and, at our request, you deliver the documents to us, against trust receipts or otherwise, prior to the presentation of the relative draft, we shall pay to you on demand the amount of any claim made against you because of the delivery.  We further authorize you to pay or accept, as the case may be, a draft when it is presented, regardless of whether or not the draft or any document that may accompany it complies with the terms of the letter of credit.

7.   Bills of Lading

Unless otherwise provided in writing, you may receive and accept as "bills of lading" under the letter of credit any documents issued by or on behalf of any carrier that acknowledge receipt of property for transportation, whatever the specific provisions of the documents.  The date of each such document shall be deemed the date of shipment of the property mentioned in the document.  Any bill of lading issued by or on behalf of an ocean carrier may be accepted by you as an "ocean bill of lading," whether or not the entire transportation is by water.  Part shipments or shipments in excess of the quantity called for in the credit may be made, and you may honor the relative drafts, our liability to reimburse you for payments made or obligations incurred on such drafts being limited to the amount of the letter of credit.  If the letter of credit specifies shipments in installments within stated periods, and the shipper fails to ship in any designated period, the letter of credit shall not be available for that or any subsequent installments.  You may receive and accept as documents of insurance under the letter of credit either insurance policies or insurance certificates, which need not be for an amount of insurance greater than the amount paid by you under or relative to the letter of credit.  You may receive, accept, or pay as complying with the terms of the letter of credit any drafts or other documents, otherwise in order, which may be signed by, or issued to, the administrator or executor of; or the trustee in bankruptcy of; or the receiver for any of the property of the party in whose name the letter of credit provides that any drafts or other documents should be drawn or issued.  You may also receive and accept as sufficient and controlling the description of property contained in the invoice, and may receive and accept bills of lading, insurance, and other documents, even if their description of the property differs from that contained in the invoice.  You and any of your correspondents may receive and accept bills of lading containing stamped, written, or typewritten provisions on them, whether or not signed or initialed, and may assume conclusively that such provisions were authorized by the carrier or any agent of the carrier.

8.   Dating of Drafts

Except as otherwise provided in writing, you or any of your correspondents may accept or pay any draft dated on or before the expiration of any time limit expressed in the letter of credit, regardless of when drawn and whether or when negotiated, provided the other required documents are dated on or prior to the expiration date of the letter of credit.

9.   Grant of Security Interest

As security for any and all our obligations and liabilities under this Agreement, whether joint or several, direct or indirect, absolute or contingent, or now or hereafter existing, or due or to become due, we grant to you a security interest in all property shipped or to be shipped pursuant to or in connection with the letter of credit.  A security interest is also granted in and to any of the drafts, instruments, or demands drawn or made under this Agreement, and in and with respect to any and all shipping documents, warehouse receipts, or policies or certificates of insurance and other documents accompanying or relative to drafts drawn or made under the letter of credit.  The security interest is granted whether or not the goods, documents, or other property are released to us, or on our order, on trust or bailee receipt or otherwise under any instrument whereby you retain a security interest, and is given and applies to the proceeds of each and all of the foregoing, until such time as all of our obligations and liabilities of credit under this Agreement have been fully paid and discharged.

10.   Rights and Powers as to Collateral

All such goods, instruments, documents, and other property, together with any and all other property in which you may be granted a security interest by us, or any of us, under this Agreement or any other instrument, are referred to in this Agreement as the "collateral."  Any or all of the collateral may be held and disposed of by you as provided in this Agreement.  The receipt by you of other security, including cash, shall not be deemed a waiver under this Agreement of any of your rights and powers with respect to the collateral.  If you deliver to us any of the property or the documents of title to the property prior to your having received reimbursement with respect to the relative drafts or acceptances described in this Agreement, we agree to execute and deliver to you trust receipts or other security instruments and financing statements complying with the requirements of applicable law, in such form as you may require, and to pay all filing fees in connection with same.  On any transfer, sale, delivery, surrender, or endorsement of any bill of lading, warehouse receipt, or other document at any time held by you, or held for your account by any of your correspondents, relative to any drafts accepted by you in reliance on this Agreement, we shall hold you harmless from and against each and every claim, demand, action, or suit which may arise against you, or any of your correspondents by reason of such action.  You may file a financing statement, at your option, without our signature with respect to any of the abovedescribed property.  It is understood that your rights as described in this Agreement shall be in addition to and not in limitation of, your rights under any applicable law.

11.   Pledge

We pledge to you as security for our obligations and liabilities under this Agreement, any and all of our property in your possession or control, or that of any third party acting on your behalf; whether for the express purpose of being used by you as collateral security, or for safekeeping, or for any other or different purpose, including such property as may be in transit by mail or carrier to or from you.  A lien and security interest is given you on and in such property for the aggregate amount of our obligations and liabilities under this Agreement.  We further authorize you, at your option, at any time, whether or not the property then held by you as security under this Agreement is deemed by you to be adequate, to appropriate and apply on such obligations and liabilities, whether or not then due, any moneys now or hereafter with you on deposit, or otherwise to our credit or belonging to us.  In your discretion, you may hold any such moneys as security for any of our obligations and liabilities until the exact amount shall have been definitely ascertained by you.

12.   Additional Security

At any time, and from time to time, we shall, on demand, deliver, convey, transfer, or assign to you, as security for our obligations and liabilities under this Agreement, and for such other obligations and liabilities, absolute or contingent, due or to become due, which are now, or may at any time hereafter, be owing by us to you, additional security of a character and value satisfactory to you, or to make such cash payments as you may require.

13.   Transfer and Registration of Collateral

You are authorized, at your option and without any obligation to do so, to transfer to and register in the names of your nominees all or any part of the property that may be held by you as security under this Agreement, and to do so before or after the maturity of any of such obligations and liabilities, with or without notice to us.

14.   Effect of Release or Substitution of Collateral

Your rights, liens, and security interests under this Agreement shall continue unimpaired, and we shall be and remain obligated in accordance with the terms and provisions of this Agreement notwithstanding the release or substitution of any property that may be held as collateral or of any rights or interests deposit in such property, or any delay, extension of time, renewal, compromise, or other indulgence granted by you in reference to any of our obligations and liabilities under this Agreement, or any promissory note, draft, bill of exchange, or other instrument given to you in connection with any of such obligations and liabilities.  We waive notice of any such delay, extension, release, substitution, renewal, compromise, or other indulgence, and consent to be bound as fully and effectually as if we had expressly agreed in advance.

15.   Acceleration of Obligations and Liabilities Upon Default

All of our obligations and liabilities under this Agreement shall, at your option, become immediately due and payable without demand or notice, notwithstanding any credit or time allowed to us or any of us under this Agreement or under any instrument, on the failure of any of us to pay, when due, any of our obligations and liabilities under this Agreement, on the failure to furnish satisfactory additional collateral, on the death of any of us, or on the making by us or any of us of an assignment for the benefit of creditors, or on the filing of any voluntary or involuntary petition in bankruptcy or for an arrangement or reorganization by or against us or any of us, or on the application for the appointment of a receiver of any of the property of all or any of us, or on any act of bankruptcy or state of insolvency of all or any of us, or on the issuance of a writ or order of attachment or garnishment against the property or assets of all or any of us, or on the filing of a suit, proceeding, or other action, whether at law or equity, for the dissolution, reorganization, or liquidation of all or any of us.

16.   Sale of Collateral Upon Default

If any of the events set forth in Paragraph 15 shall occur, to the extent permitted by applicable law, you shall have the right, as to the collateral, to sell any of the collateral, without advertisement and without notice to us or any of us, all of which are expressly waived, at private sale or at public auction or at brokers' board or otherwise, at your option, in such parcel or parcels and at such time or times and at such place or places and for such price of prices and on such terms and conditions as you may deem proper.  You shall also have the right, power, and authority, in your discretion, to collect or cause to be collected or otherwise to convert into money, all or any part of the collateral.  You may, in your discretion, enforce the collection of the collateral, with all additions to it and substitutes for it, by action or otherwise, and may surrender, compromise, release, renew, extend (for one or more periods, whether or not longer than the original), or exchange any or all of the collateral.  You may apply the net proceeds of the sale or sales, collection, exchange, or conversion, together with any balance of deposits and any sums credited by or due from you to us or any of us in general account or otherwise, to the payment of the costs, expenses, and attorneys' fees incurred in respect to the collateral, and the storage, sale, collection, exchange, or conversion of it, and to the payment of any and all of the obligations and liabilities under this Agreement.  If any such sale be at brokers' board or at public sale, you may yourself, to the extent permitted by applicable law, be a purchaser at such sale, free from any right of redemption which we and each of us expressly waive and release.  You are, however, released from all obligation and liability to collect any of the collateral or to bind or hold any maker or endorser of it.  No delay on your part in exercising any power of sale or any other rights or options under this Agreement and no notice or demand which may be given to or made on us by you with respect to any power of sale or other right or option under this Agreement, shall constitute a waiver, or limit or impair your right to take any action or to exercise any power of sale, or any other rights or options under this Agreement, without notice or demand, or prejudice your rights against us in any respect.

17.   Acts and Omissions of Users of Letter of Credit

The users of the letter of credit shall be deemed our agents.  We assume all risks of their acts and omissions.  Neither you nor your correspondents shall be responsible in any respect for: the existence, character, quality, quantity, condition, packing, value, shipment, arrival, or delivery of the property purporting to be represented by any documents or any difference in it from that expressed in any documents; the validity, sufficiency, or genuineness of documents, or of any endorsements on them, even if the documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent, or forged; the time, place, manner, or order in which shipment is made or partial or incomplete shipment; the character, adequacy, validity, or genuineness of any insurance of the property or any risk connected with insurance; the insolvency or responsibility of any insurer; delay in arrival or failure to arrive of either the property or any of the documents relating to the property; delay in giving or failure to give notice of arrival or any other notice; compliance with or circumstances resulting from any laws, customs, and regulations that may be effective in countries of negotiation or payment of the letter of credit; the failure of any draft, instrument, or demand to bear any reference or adequate reference to the letter of credit, or the failure of documents to accompany any draft, instrument, or demand at negotiation, or the failure of any person to note the amount of any draft, instrument, or demand on the reverse of the letter of credit, or to surrender or take up the letter of credit or to send forward documents apart from drafts, instruments, or demands, as required by the terms of the letter of credit, each of which provisions, if contained in the letter of credit itself; it is agreed may be waived by you; or errors, omissions, interruptions, or delays in transmission or delivery of any messages, by mail, cable, telegraph, wireless, or otherwise, whether or not they be in cipher.

18.   No Liability

Neither you nor your correspondents shall be responsible in any respect for any act, error, neglect, delay, fraud, deviation from instructions or default, omission, insolvency or failure in the business of any vendor, shipper insurer, issuer, or other party having, or purporting to have, any relationship to any of the property or any of the documents, or of any of your correspondents, or for any refusal by you or any of your correspondents to pay or honor drafts drawn under the letter of credit because of any applicable law, decree or edict, legal or illegal, of any governmental agency now or hereafter in force, or for any other matter beyond your control.

19.   Impairment of Rights

None of the above shall affect, impair, or prevent the vesting of any of your rights or powers under this Agreement, or of our obligations under this Agreement.

20.   Exculpation for Actions or Omissions

If done in good faith, any action taken by you in connection with the letter of credit or the relative drafts, instruments, or demands, documents, or property shall be binding on us and shall not put you or your correspondents under any resulting liability to us.  The same is true with regard to any inaction or omission by you or any of your correspondents.  We shall indemnify you and hold you harmless from and against each and every claim, demand or action which may arise against you or any of your correspondents because of any such action or inaction.

21.   Licenses

We shall promptly procure any necessary import, export, and other licenses for the import, export, or shipping of any and all property shipped under or pursuant to or in connection with the letter of credit.  We shall comply with any and all foreign and domestic governmental regulations in regard to the shipment of any and all such property or the financing of the property, and shall furnish such certificates in that respect as you may from time to time require.  We shall keep the property covered by insurance satisfactory to you, and shall assign the policies or certificates of insurance to you, or make the loss or adjustment, if any, payable to you, at your option.  If demanded by you in writing, we shall furnish you with evidence of the acceptance by the insurers of such an assignment.

22.   Violation of Laws

No shipments will be made or other transactions undertaken under the letter of credit in violation of the laws of the United States or the regulations of any governmental agency.


23.   Incorporation of Uniform Customs and Practices

Except as otherwise expressly provided in this Agreement, or as you and we may otherwise expressly agree, the Uniform Customs and Practice for Documentary Credits fixed by the International Chamber of Commerce shall in all respects be deemed a part of this Agreement, as fully as if incorporated here, and shall apply to the letter of credit.

24.   Changes and Modifications

In the event of any change or modification with respect to the amount or duration of the letter of credit; the time or place of shipment of any relative property; the drawing, negotiation, presentation, acceptance, or maturity of any drafts, acceptances, or other documents; or any of the other terms or provisions of the letter of credit, such being done at our request, this Agreement shall be binding on us in all respects with regard to the letter of credit so changed or modified, inclusive of any action taken by you or any of your correspondents relative to it.

25.   Assignments and Transfers

You may assign or transfer this Agreement, or any instrument evidencing all or any of our obligations or liabilities under this Agreement, and may deliver all or any of the property then held as security, to the transferee or transferees, who shall then become vested with all the powers and rights given to you under the Agreement or in the instrument transferred.  You shall thereafter be forever relieved and fully discharged from any liability or responsibility with respect to it, but you shall retain all rights and powers with respect to this Agreement, or any instrument, or any property not so transferred.

26.   Waiver of Rights

You shall not be deemed to have waived any of your rights under this Agreement, unless you or your authorized agent shall have signed a waiver in writing.  No such waiver, unless otherwise expressly stated, shall be effective as to any transaction that occurs after the date of the waiver, including any continuance of a breach after a waiver.

27.   Definition of "Property"

The word "property" as used in this Agreement includes goods, merchandise, securities, funds, choses in action, and any and all forms of property, whether real, personal or mixed, and any right or interest in such items.

28.   Binding Effect; Successors and Assigns

This Agreement shall be binding on you and us, and on our heirs, executors, administrators, successors and assigns, and shall inure to the benefit of; and be enforceable by, our respective heirs, executors, administrators, successors and assigns.


29.   Joint and Several Responsibilities

If this Agreement is signed by two or more of us, it shall be our joint and several agreement.  Each of us shall be deemed to be the agent of all of the others of us.  You may, except to the extent expressly otherwise provided in this Agreement, act at the direction or request of any one or more of us, return or turn over the collateral and any other property to any one or more of us, and give any notice or notices, whether or not required to be given, to any one or more of us, all as you may elect and without notice to any others of us.

30.   Interpretation

Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law.  However, if any provision of this Agreement shall be prohibited by or invalid under such law, that provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of the provision or the remaining provisions of this Agreement.

31.   Governing Law

This Agreement has been made and delivered at ______, ______, ______ ______, on ______, and shall be construed in accordance with and governed by the laws of ______.

[Sig Block Party 1]
[Notary Party 1]

[Sig Block Party 2]
[Notary Party 2]

Number of Pages12
DimensionsDesigned for Letter Size (8.5" x 11")
EditableYes (.doc, .wpd and .rtf)
UsageUnlimited number of prints
Product number#43639

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