Guaranty Fee Agreement Template for Nigeria

The Guaranty Fee Agreement is a crucial document in Nigerian financial and commercial transactions where one party (the guarantor) provides a guarantee for another party's obligations and receives compensation for this service. This agreement becomes necessary when a guarantee arrangement is put in place, particularly in project finance, corporate lending, or large commercial transactions. The document details the fee structure, calculation method, payment terms, and related obligations, ensuring compliance with Nigerian banking regulations and financial laws. It's particularly important in the Nigerian context where guarantees are frequently required for major transactions and where the Central Bank of Nigeria has specific requirements for financial arrangements. The agreement helps protect the guarantor's interests by ensuring they receive appropriate compensation for the risk they're assuming while providing clarity on all parties' obligations.

1. Parties: Identifies all parties to the agreement including the guarantor(s), beneficiary, and principal debtor

2. Background: Sets out the context of the underlying guaranteed obligations and the agreement to pay guaranty fees

3. Definitions and Interpretation: Defines key terms and establishes interpretation rules for the agreement

4. Guaranty Fee: Specifies the fee amount or calculation method, including any variations based on circumstances

5. Payment Terms: Details the timing, method, and currency of fee payments

6. Taxes and Deductions: Addresses tax implications and requirements for gross-up payments if applicable

7. Representations and Warranties: Sets out the parties' confirmations regarding their capacity and authority

8. Duration and Termination: Specifies the term of the agreement and circumstances for termination

9. Default and Remedies: Outlines events of default and available remedies

10. Notices: Specifies how formal communications between parties should be made

11. Governing Law and Jurisdiction: Confirms Nigerian law as governing law and specifies jurisdiction for disputes

12. Boilerplate Provisions: Standard clauses including entire agreement, amendments, severability, and counterparts