Pre Authorized Payment Agreement Template for Canada

The Pre-Authorized Payment Agreement is essential for businesses and organizations operating in Canada that collect recurring payments from customers or clients. This document is specifically designed to comply with Canadian banking regulations and Payments Canada Rule H1, which governs pre-authorized debits (PADs). It is commonly used for regular payments such as utility bills, insurance premiums, membership fees, or loan payments. The agreement must include specific elements required by Canadian law, including clear authorization terms, payment details, cancellation rights, and recourse procedures. It serves as both a legal authorization and a practical tool for establishing automated payment arrangements while protecting the rights of both the payor and payee under Canadian jurisdiction.

1. Parties: Identification of the payor (customer) and payee (company), including full legal names and relevant contact information

2. Background: Brief context explaining the purpose of the pre-authorized payment arrangement and the underlying service or product

3. Definitions: Key terms used in the agreement, including 'PAD' (Pre-Authorized Debit), 'Processing Institution', and other relevant banking and payment terms

4. Authorization: Express authorization from the payor for the payee to debit the specified account, including the purpose of the payment (personal, business, funds transfer)

5. Payment Details: Specific details about the payment arrangement including amount (fixed or variable), frequency, and timing of debits

6. Bank Account Information: Payor's banking details including institution number, transit number, and account number

7. Cancellation Rights: Clear statement of the payor's right to cancel the agreement and the required notice period (minimum 30 days as per Payments Canada rules)

8. Recourse and Reimbursement: Information about the payor's recourse rights and reimbursement procedures for unauthorized transactions

9. Modification: Process and requirements for making changes to the agreement or payment details

10. Contact Information: Detailed contact information for both parties for notices and communications regarding the PAD