Many a time it happens that someone owes money to us, but we do not have legal documents that would compel the borrower to pay us the money at every specific time interval, be it every month, every six months, or every year depending on the nature of the transaction the obligee and obligor shares. But there is one legal document, known as payment agreement, that allows the obligee to receive regular payment from the borrower.
Payment agreement is a document signed by the obligee and a payee, which states that the obligee has to receive a certain amount from a payee to avoid a specific enforcement action. There are many situations where people have to sign such agreements. For example, in divorce cases, a mother can get the payment agreement signed from the father stating that he has to pay a certain amount for the child till he attains a certain age. Some insurance companies too, get an agreement signed by the policy holders stating that they would pay any amounts that are not paid by the insurance company. Hence, this is a legal document that binds the payee to make regular payments to the obligee.
Looking at the diverse nature of payment agreement, it is evident that its structure is subject to change depending on the kind of contract. For example, the template of an insurance company would be different from the personal loan payment for the alimony after divorce. But there are some basic contents that every agreement has to possess. They are as following:
- Name of the obligee and payee
- The total amount that the payee has to pay the obligee
- Date of the agreement
- Date of the commencement of the payment
- The duration or dates of payments
- The ways in which the payment will be made
- Details of collaterals and related clauses
- Any other peculiar rules or clause related to the contract or agreement
Given below is a generic format that you can refer to draft your own.
|Payment Agreement Template
This payment agreement plan is made between the (Name and address of the obligee) and (Name and address of the payee) wherein the (payee) agrees to make payments to the (obligee) in accordance with the terms provided below:
$(Amount) to be received by the (Name and address of the obligee) on or before the first of every month from (Date of commencement of the payment) until the outstanding balance is paid in full which is as of now $(Outstanding balance).
Mention all the clauses and exceptions here in a list format.
Declaration: I have read the payment agreement and agree with all the terms. I have received a copy of the necessary documents and well aware of the consequences of not meeting with the aforementioned accordance.
Name and address of the payee:_____________________
Signature of the payee:____________________________
Name and address of the obligee:_____________________
Signature of the obligee:____________________________
Name and address of the witness/es:_____________________
Signature of the witness/es:____________________________
This was the general format, which may differ as per each contract. I hope this information was resourceful for you. So, go ahead and draft your own contract as per your requirements. And, make sure to use it as when necessary, to avoid any legal issues in future.