A third party funding agreement is a legal document that outlines the terms and conditions of a funding arrangement between two parties, where a third party provides funding to one party, usually in exchange for a percentage of the profits or equity in the project. This type of agreement is commonly used in various business ventures such as start-ups, real estate investments, and other capital-intensive projects.
In this article, we will be discussing a sample third party funding agreement. This document is intended to be used as a guide and should be reviewed by a legal professional before being used in any business transaction.
Parties Involved
The third party funding agreement typically involves three parties: the funder, the recipient, and the project. The funder is the third party providing the funds, the recipient is the party receiving the funds, and the project is the venture that will be funded.
Terms of the Agreement
The agreement outlines the terms and conditions of the funding arrangement. This may include the amount of funding, the percentage of profits or equity the funder will receive, the timeline for the investment, and the conditions for repayment. It is important to specify the purpose of the funding and how it will be used in the project.
In addition, the agreement should include the conditions for terminating the agreement. This may include situations where the project is not successful, or the recipient is unable to make the required payments.
Warranties
The agreement may also include warranties from the recipient. This may include a guarantee that the recipient has the legal authority to enter into the agreement, the project is feasible, and that all necessary permits and licenses have been obtained.
Confidentiality
The agreement may also include clauses relating to confidentiality. This is to protect any sensitive information that may be shared between the parties during the course of the funding arrangement. The agreement may specify that any confidential information must be kept confidential even after the termination of the agreement.
Governing Law
The agreement should specify the jurisdiction and governing law that will be used in case of any legal disputes between the parties. This may include the location of the project and the country where the agreement was signed.
Conclusion
In summary, a third party funding agreement is a legally binding document that outlines the terms and conditions of a funding arrangement between three parties. The agreement should be reviewed by a legal professional before being used in any business transaction. It is a crucial document that helps to protect the interests of all parties involved in the project.