Accounts Receivable Purchase Agreement Template for Hong Kong

The Accounts Receivable Purchase Agreement is a critical financial instrument used in Hong Kong when companies seek to monetize their accounts receivable for working capital purposes. This document is typically employed when a business wishes to sell its receivables to a financial institution or factoring company at a discount in exchange for immediate cash. The agreement must comply with Hong Kong legal requirements and market practices, particularly concerning the assignment of receivables and registration of charges. It includes detailed provisions on eligibility criteria for receivables, purchase price calculations, representations and warranties, operational procedures for ongoing purchases, and collection mechanisms. The document is especially relevant in trade finance and working capital management, providing businesses with an alternative funding source while offering purchasers attractive investment opportunities.

1. Parties: Identification of the Seller (company selling receivables) and Purchaser (entity buying receivables)

2. Background: Context of the agreement, including the Seller's business and its generation of receivables, and the Purchaser's interest in acquiring them

3. Definitions: Definitions of key terms used throughout the agreement, including 'Eligible Receivables', 'Purchase Price', 'Collection Period', etc.

4. Sale and Purchase: Core provisions regarding the sale and purchase of receivables, including the transfer mechanism and purchase price calculation

5. Conditions Precedent: Conditions that must be satisfied before the agreement becomes effective or before each purchase

6. Representations and Warranties: Key statements of fact and assurances from both parties, particularly regarding the validity and ownership of receivables

7. Covenants: Ongoing obligations of both parties throughout the term of the agreement

8. Operational Procedures: Procedures for offering receivables, acceptance, payment of purchase price, and collections

9. Collections and Payments: Management of collections, establishment of collection accounts, and payment procedures

10. Events of Default: Circumstances constituting default and consequences thereof

11. Termination: Circumstances under which the agreement can be terminated and the consequences of termination

12. Confidentiality: Obligations regarding confidential information

13. Notices: Process and requirements for formal communications between parties

14. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, amendments, etc.