Payment Agreement Template
PandaTip: This Payment Agreement Template is written to cover a situation where one party (the “Owing Party”) owes another party (the “Owed Party”) a sum of money and the two parties would like to come up with a payment plan to govern the payments.
This Payment Agreement is entered into as of [DATE] by and between [OWING PARTY NAME] having its principal place of business located at [ADDRESS] (the “Owing Party”) and [OWED PARTY NAME] having its principal place of business located at [ADDRESS] (the “Owed Party”), both of whom agree to be bound by this Agreement.
WHEREAS, the Owing Party owes the Owed Party [AMOUNT] (the “Deficiency”); and
WHEREAS, the Owing Party and the Owed Party desire to enter into an agreement whereby the Owing Party shall pay the Owed Party the sum of the Deficiency on a payment plan according to the terms and conditions herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises made by the parties hereto, the Owing Party and the Owed Party (individually, each a “Party” and collectively, the “Parties”) covenant and agree as follows:
DEFICIENCY ACKNOWLEDGMENT. The Owing Party agrees and acknowledges that it owes the Owed Party an amount of money equal to the Deficiency as defined above. Nothing in this Payment Agreement is a waiver of any amounts owed and in the event of any breach of this Agreement by the Owing Party, the Owed Party’s rights to the Deficiency shall not be limited.
PandaTip: Here, we have the Owing Party acknowledging that the Deficiency exists and that even though this Payment Agreement is being executed, there is nothing inherent in such agreement that takes the Owing Party off the hook other than making payments according to the plan.
OWING PARTY REPRESENTATION AND WARRANTY. The Owing Party hereby represents and warrants that this Agreement and the payment plan herein has been developed in a manner that that the Owing Party reasonably believes it can pay the Owed Party without further interruption notwithstanding an additional change in circumstances.
PandaTip: Here, the Owing Party is affirming that it has the ability to pay according to the payment plan laid out in this Payment Agreement. This is useful to the Owed Party as it protects it from the Owing Party just entering this Agreement to get the Owed Party off its back as if the Owing Party is doing so, then it is evidence of bad faith, which can result in further damages in litigation should it get to that point. It does, however, in the interest of fairness include an exception for a material change in circumstances.
PAYMENT PLAN. The Parties hereby agree to the payment plan as described on Exhibit A attached hereto (the “Payment Plan”). The Owing Party agrees to make the payments to the Owed Party associated with the dates as listed on the Payment Plan.
PandaTip: It is important to note here that the amount required should simply amount to the Deficiency owed. In the event that penalties or interest are added, a whole other set of rules comes into play.
METHOD OF PAYMENT. Payments shall be made to the Owed Party in accordance with the Payment Plan via [METHOD].
PandaTip: The Owed Party can specify whatever method by which it wants to be paid, whether by cash, PayPal, bank transfer, wire, etc.
RELEASE AND INDEMNIFICATION. In consideration for agreeing to this Payment Agreement, the Owed Party hereby releases any claims against the Owing Party related to the Deficiency as of the date of this Agreement. However, nothing in this Agreement is meant to release the Owing Party from its obligation to pay the Deficiency according to the Payment Plan herein or limit the rights of the Owed Party in collecting said Deficiency.
PandaTip: The purpose of this section is to allow the Owing Party to make the payments without concern that it will get sued for the Deficiency as long as it adheres to this Payment Agreement. At the same time, it reasserts the Owed Party’s rights in the Deficiency.
ACCELERATION UPON BREACH. In the event that the Owing Party fails to make any payments in accordance with the Payment Plan, upon reaching ten (10) days after the failure to make any such prescribed payment, the full amount of the Deficiency shall come immediately due and payable.
PandaTip: This gives the Payment Agreement some teeth. If the Owing Party fails to make a payment for ten days, then the total amount accelerates, leaving the Owing Party with a much bigger bill to pay.
ASSIGNMENT. The Owed Party may assign this Agreement with written notice to the Owing Party. In the event of such assignment, the assignee may designate a new method of payment.
PandaTip: This clause gives the Owed Party the ability to transfer payments to some other third party and allows that third party to change the method of payment, but everything else regarding the Payment Agreement should remain effective.
NO MODIFICATION UNLESS IN WRITING. No modification of this Agreement shall be valid unless in writing and agreed upon by both Parties.
APPLICABLE LAW. This Consulting Agreement and the interpretation of its terms shall be governed by and construed in accordance with the laws of the State of [STATE] and subject to the exclusive jurisdiction of the federal and state courts located in [COUNTY], [STATE].
SEVERABILITY. In the event any provision of this Agreement is held to be invalid, illegal, or enforceable for any reason, then the Parties agree that such provision shall be deemed to be struck and the remainder of the Agreement shall be enforced as if the struck provision were never included in the Agreement.
APPLICABLE LAW. This Agreement and the interpretation of its terms shall be governed by and construed in accordance with the laws of the State of [State] and subject to the exclusive jurisdiction of the federal and state courts located in [COUNTY], [STATE].
IN WITNESS WHEREOF, each of the Parties has executed this Agreement, both Parties by its duly authorized officer, as of the day and year set forth below.
[NAME], [TITLE] DATE
[NAME], [TITLE] DATE
EXHIBIT A – PAYMENT PLAN