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Debt Settlement Agreement
"I need a Debt Settlement Agreement for my manufacturing company to settle an outstanding supplier debt of SAR 2.5 million through 12 monthly installments, with the first payment starting March 2025, including provisions for early payment discounts and security in the form of equipment collateral."
1. Parties: Identification of the creditor and debtor, including full legal names, addresses, and official registration numbers if applicable
2. Background: Description of the original debt, its origin, and current status
3. Definitions: Key terms used throughout the agreement, including 'Settlement Amount', 'Original Debt', 'Payment Date', etc.
4. Acknowledgment of Debt: Formal acknowledgment of the original debt amount and its validity
5. Settlement Terms: Details of the agreed settlement amount and confirmation that it complies with Sharia principles
6. Payment Terms: Schedule of payments, payment method, and payment instructions
7. Representations and Warranties: Statements by both parties regarding their capacity and authority to enter into the agreement
8. Default Provisions: Consequences of failing to meet payment obligations and remedies available
9. Release and Discharge: Terms of release from the original debt upon completion of settlement payments
10. Governing Law and Jurisdiction: Confirmation of Saudi law as governing law and specification of competent courts
11. Notices: Method and addresses for official communications between parties
12. Entire Agreement: Confirmation that this document represents the complete agreement between parties
1. Security Provisions: Include when additional security or collateral is being provided for the settlement amount
2. Guarantor Provisions: Include when a third party is guaranteeing the settlement payments
3. Confidentiality: Include when parties wish to keep the settlement terms private
4. Force Majeure: Include when parties want to address potential extraordinary circumstances affecting payment ability
5. Assignment: Include when either party needs the right to assign their rights or obligations
6. Partial Payments: Include when specific rules for allocation of partial payments need to be established
7. Early Payment Provisions: Include when early payment options and any associated discounts are being offered
1. Schedule 1 - Payment Schedule: Detailed breakdown of payment amounts and due dates
2. Schedule 2 - Original Debt Documentation: Copies or details of original debt agreements or instruments
3. Schedule 3 - Security Details: Details of any security or collateral provided (if applicable)
4. Appendix A - Calculation of Settlement Amount: Detailed calculation showing how the settlement amount was determined in compliance with Sharia principles
5. Appendix B - Form of Release: Template for the final release document to be issued upon completion of payments
6. Appendix C - Payment Instructions: Detailed banking or payment information and procedures
Authors
Banking & Financial Services
Islamic Finance
Real Estate
Construction
Manufacturing
Retail
Healthcare
Education
Professional Services
Telecommunications
Energy
Trading & Commerce
Investment Services
Insurance
Legal
Finance
Credit Control
Collections
Risk Management
Compliance
Treasury
Accounts Receivable
Islamic Banking
Corporate Affairs
Debt Recovery
Business Development
Chief Financial Officer
Financial Controller
Credit Manager
Collections Manager
Legal Counsel
Compliance Officer
Sharia Compliance Officer
Risk Manager
Treasury Manager
Accounts Receivable Manager
Debt Recovery Specialist
Corporate Lawyer
Financial Analyst
Business Development Manager
Contract Administrator
Islamic Banking Specialist
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