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Supplier Credit Agreement for Canada

Supplier Credit Agreement Template for Canada

A Canadian Supplier Credit Agreement is a legally binding document that establishes the terms and conditions under which a supplier extends credit to a customer for goods or services. The agreement operates within the framework of Canadian federal and provincial laws, including the Interest Act and applicable Provincial Personal Property Security Acts. It details credit limits, payment terms, interest rates, security arrangements, and the rights and obligations of both parties. The document incorporates specific Canadian legal requirements for interest rate disclosure, security registration, and privacy protection while providing mechanisms for enforcement under Canadian jurisdiction.

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What is a Supplier Credit Agreement?

The Supplier Credit Agreement is essential in Canadian business transactions where suppliers provide goods or services on credit terms to their customers. This document becomes necessary when businesses seek to establish formal credit arrangements with their suppliers, typically for ongoing commercial relationships or large-scale purchases. The agreement must comply with Canadian federal legislation such as the Interest Act and Bank Act, as well as provincial security and consumer protection laws. A well-structured Supplier Credit Agreement includes comprehensive details about credit limits, payment schedules, interest calculations, security arrangements, and default provisions. It's particularly important in industries with significant supply chain operations or where substantial credit facilities are required for business operations. The document serves to protect both the supplier's interests in extending credit and the customer's rights under Canadian law.

What sections should be included in a Supplier Credit Agreement?

1. Parties: Identification of the supplier extending credit and the customer receiving credit, including full legal names and addresses

2. Background: Context of the agreement, including the nature of the business relationship and the purpose of the credit arrangement

3. Definitions: Definitions of key terms used throughout the agreement

4. Credit Facility: Details of the credit being extended, including credit limit and purpose

5. Interest and Fees: Interest rate(s), calculation method, and any additional fees or charges

6. Payment Terms: Payment schedule, method of payment, and minimum payment requirements

7. Security: Description of any security or collateral provided to secure the credit

8. Representations and Warranties: Statements of fact and promises made by both parties

9. Covenants: Ongoing obligations of the customer during the term of the agreement

10. Events of Default: Circumstances that constitute default and consequences thereof

11. Remedies: Rights and remedies available to the supplier in case of default

12. Term and Termination: Duration of the agreement and circumstances for termination

13. General Provisions: Standard legal provisions including notices, amendments, governing law, etc.

What sections are optional to include in a Supplier Credit Agreement?

1. Insurance Requirements: Required when the credit facility requires insurance coverage for secured assets

2. Financial Covenants: Include when specific financial ratios or conditions must be maintained

3. Guarantees: Required when a third party is guaranteeing the credit obligations

4. Cross-Default Provisions: Include when default under other agreements should trigger default under this agreement

5. Currency Provisions: Required for cross-border transactions or when multiple currencies are involved

6. Set-off Rights: Include when the supplier wants the right to set off amounts owed against other accounts

7. Assignment and Transfer: Include when either party needs the ability to assign or transfer rights under the agreement

What schedules should be included in a Supplier Credit Agreement?

1. Schedule A - Credit Limits and Pricing: Detailed breakdown of credit limits, interest rates, and fee structure

2. Schedule B - Payment Schedule: Detailed payment terms, dates, and amounts

3. Schedule C - Security Documents: List and copies of security documents, if applicable

4. Schedule D - Financial Reporting Requirements: Details of required financial statements and reporting frequency

5. Schedule E - Permitted Liens: List of pre-existing or permitted liens on secured assets

6. Appendix 1 - Form of Draw Request: Standard form for requesting draws on the credit facility

7. Appendix 2 - Compliance Certificate: Template for periodic compliance certification

Authors

Alex Denne

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

Jurisdiction

Canada

Publisher

Genie AI

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions








































Clauses






























Relevant Industries

Manufacturing

Wholesale Trade

Retail

Construction

Technology

Agriculture

Mining

Transportation and Logistics

Industrial Equipment

Healthcare

Energy

Telecommunications

Professional Services

Relevant Teams

Legal

Finance

Procurement

Treasury

Credit Control

Risk Management

Commercial Operations

Supply Chain

Accounts Payable

Accounts Receivable

Compliance

Operations

Relevant Roles

Chief Financial Officer

Finance Director

Credit Manager

Procurement Manager

Supply Chain Director

Legal Counsel

Commercial Director

Treasury Manager

Accounts Payable Manager

Accounts Receivable Manager

Risk Manager

Contract Administrator

Business Development Manager

Financial Controller

Operations Director

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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