A commercial loan agreement is a binding legal document that enumerates the roles and responsibilities of both the lender and the borrower, when they engage in a loan transaction. In most cases, the lender is a bank or a similar financial institution. The borrower is usually an individual or a business. In most cases, the commercial loan agreement is drafted by the lender, or in this case, the bank. To protect your financial interests during the period of the loan, you have to scrutinize each and every aspect of the commercial loan agreement. If you are not familiar with such documents, the best course of action is to engage the services of loan agreement lawyers.
Before getting into why you should elicit professional legal advice during the drafting and signing of a loan agreement, here is some important information that you should know about them.
The Essential Clauses
Here is a brief breakdown and explanation of the standard legal clauses that commercial lawyers would generally choose to include in a commercial loan agreement in Australia.
Now that you know the basic aspects of a commercial loan agreement, here is some more information about why you need it in the first place. You will also be able to get some insights about how it’s the best decision to have a lawyer present who will represent you.
Why You Need A Loan Agreement
The lending of money is an extremely important affair, and it is very important to have paperwork in place that protects both the parties involved. Apart from enumerating and explaining the various terms and conditions associated with the loan, the agreement also serves as a proof of the loan itself. The loan agreement is primarily put in place to protect the interests of the party that is lending out its money, since this is the party that stands to face the biggest risk. Proof of the loan is important, because some borrowers try to get out of repayment by claiming that the loan was a gift or an endowment.
Even if you are just thinking of lending money out to someone you know like a relative or a close friend, it is best to have a loan agreement in place. You might think that it can make the situation awkward, but it is always better to be safe than to be sorry. The primary function of the commercial loan agreement is to protect the financial interests of the parties that are participating in it. To ensure that your interests are protected, you need to engage the services of loan agreement lawyers. There is no separate legal field for loan agreements, and these matters are mainly taken care of and overseen by commercial lawyers only.
Specific Areas You Should Remember
There are some key aspects of a commercial loan agreement, which you have to remember to agree on only in the presence of your commercial lawyers Perth. These aspects include the rate of interest, the default interest, prepayment options, securities and collateral, events of default, etc. If you are the borrower, make sure that all these items are only put in the agreement at your approval. If you are the lender, then you have to draft a fair commercial loan agreement that will protect your financial investment and be fair to the lender as well.
If you are thinking of getting into a loan transaction, then you should think of searching for “commercial lawyers Perth”, so that your financial interests can be well represented.
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