With respect to safeguards, if each party signs a separate security agreement for it, you must attach the date on which the security agreement is signed or signed by each party. A cross-default event of default is triggered when the borrower is behind the other agreement, either with the lender or with a separate third party. It is therefore appropriate for the borrower to think carefully about the other agreements he has concluded and the probability of a default lower than this one. If necessary, the borrower could try to insert a offshoring language, which exempts certain agreements from this provision. For example, it is quite common for a value of de minimus to be included in the event of a failure under another agreement. Borrowers should also ensure that the wording of this event does not impede the effectiveness of their operations or other impediments. The credit agreement should clearly describe how the money is repaid and what happens if the borrower is unable to repay. For more information, read our article on the differences between the three most common forms of credit and choose who is right for you. Credit agreements often give lenders the right to „seize“ credit – that is, to demand full payment immediately – if the borrower violates its terms. The language of the treaty that allows this is called the acceleration clause. For example, mortgage contracts may contain acceleration clauses that come into effect when the borrower misses too many payments, won`t secure the home, or doesn`t live in it. However, if a lender tries to inappropriately accelerate and call the loan, while the borrower has blocked its end of business, this is a breach of contract. Even if the acceleration is justified, it can still be an offense if it is not carried out under the terms of the agreement – for example, a lender who puts a house in foreclosure without informing the borrower of the acceleration.
In addition to the breach of the payment clause and the breach of the financial covenant, a more general default event is often included in order to identify a breach of all other obligations of the borrower arising from the loan agreement, such as breaches of obligations. The borrower could attempt to limit the default to „substantial“ infringements and/or negotiate an additional period within which the breach can be corrected before the delay event occurs….