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Charge Agreement

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CHARGE AGREEMENT

This Charge Agreement ("Agreement") is entered into as of Effective Date: by and between Client Name: with address , and Provider Name: with address .

RECITALS

WHEREAS, Provider is engaged in the business of performing the services described in this Agreement and has the expertise, staffing and systems necessary to perform such services for the Client; and

WHEREAS, Client desires Provider to perform the services and to be authorized to make charges to Client in accordance with the terms and conditions set forth herein; and

WHEREAS, the parties intend this Agreement to set forth the terms of the charge authorization, payment terms, confidentiality obligations, and the parties' respective rights and remedies.

SCOPE OF WORK

PAYMENT TERMS

If any amount due under this Agreement is not received by Provider within days following the due date, Client shall pay a late fee of on the outstanding balance, and interest thereafter at the lesser of the maximum rate permitted by law or .

TERM AND TERMINATION

Term Commencement Date:     Term End Date:

Either party may terminate this Agreement for convenience upon written notice to the other party delivered at least days prior to the effective termination date. Termination for cause may be effected immediately upon written notice if the non‑terminating party materially breaches this Agreement and fails to cure such breach within 10 days after receipt of written notice specifying the breach.

CONFIDENTIALITY

Each party (the "Receiving Party") acknowledges that during the term of this Agreement it may receive or have access to non-public, proprietary, or confidential information of the other party (the "Disclosing Party"). The Receiving Party shall: (a) use Confidential Information solely for the purposes of performing obligations under this Agreement; (b) not disclose Confidential Information to any third party except employees, agents or professional advisors who have a need to know and who are bound by obligations of confidentiality at least as protective as those in this Agreement; and (c) take reasonable measures to protect Confidential Information from unauthorized disclosure, which measures shall be no less than those used to protect its own confidential materials of similar importance. Confidential Information does not include information that is or becomes publicly available through no fault of the Receiving Party, was known to the Receiving Party prior to disclosure, or was lawfully received from a third party without restriction.

GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of without regard to its conflicts of law provisions. The parties submit to the exclusive jurisdiction of the state and federal courts located within that State for resolution of disputes arising under this Agreement.

MISCELLANEOUS

Entire Agreement: This Agreement contains the entire understanding of the parties with respect to the subject matter herein and supersedes all prior and contemporaneous agreements, proposals and communications, whether oral or written. Any amendments or modifications must be in writing and signed by authorized representatives of both parties.

Assignment: Neither party may assign or delegate its rights or obligations under this Agreement without the prior written consent of the other party, which consent shall not be unreasonably withheld; provided that Provider may assign receivables to a financing source without Client consent so long as Provider remains primarily responsible for performance.

Indemnification: Each party shall indemnify, defend and hold harmless the other party from and against any claims, liabilities or expenses arising out of the indemnifying party's gross negligence or willful misconduct in connection with the performance of this Agreement.

Notices: All notices required or permitted hereunder shall be in writing and shall be delivered to the addresses set forth at the beginning of this Agreement or to such other address as a party may designate by written notice to the other.

Client

Printed Name:

By:

Date:

Provider

Printed Name:

By:

Date:

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What a Charge Agreement Is and where it’s used

A Charge Agreement is a legal contract in which a debtor grants a creditor a security interest or charge over specified assets to secure repayment of an obligation. Typical forms include fixed charges, floating charges, and security deeds used in commercial lending, equipment financing, and real estate-secured loans. The agreement describes the charged assets, representations, covenants, events of default, remedies, and enforcement mechanisms. Parties should confirm any recording, perfection, or priority steps required by state law and, when executed electronically, consider ESIGN (15 U.S.C. ch. 96) and applicable state UETA rules for enforceability.

Why a clear Charge Agreement matters

A well-drafted Charge Agreement establishes priority, clarifies remedies, and reduces ambiguity that can lead to disputes or loss of recovery. It provides certainty for lenders and borrowers about collateral scope, filing needs, and enforcement rights while supporting regulatory and audit requirements.

Why a clear Charge Agreement matters

Who prepares and signs a Charge Agreement

Ensure the person signing has authority under corporate bylaws or organizational documents and that required corporate approvals are documented before execution.

  • Commercial lenders and banks handling secured lending and asset-based facilities.
  • Private credit funds and institutional investors documenting security interests for portfolio loans.
  • Corporate borrowers and their legal teams negotiating collateral scope and covenants.

Common signatories and approvers

Authorized Officer

An officer or director with delegated authority to bind the company signs for corporate borrowers; include title and signing capacity in the signature block and attach a corporate resolution if required.

Lender Representative

A lender officer or closing attorney signs on behalf of the lending institution; the representative must confirm internal credit approvals and any required security perfection steps.

Essential data elements to include

Parties: Full legal names
Effective Date: MM/DD/YYYY
Charged Assets: Specific description
Obligation Amount: Principal or formula
Governing Law: State name
Perfection Steps: Filing or recording

Step-by-step: completing and executing a Charge Agreement

Follow these core steps in sequence to prepare a Charge Agreement and complete a valid execution.

  • 01
    Draft: Assemble template and customize collateral descriptions and terms.
  • 02
    Internal Approval: Obtain corporate resolutions or credit approvals before signature.
  • 03
    Signature Setup: Place signature, date, and witness fields; choose eSignature or wet signing.
  • 04
    Perfection: File UCC-1 or record deed promptly to secure priority.

Typical execution and recording workflow

A practical, four-step workflow for executing and perfecting a Charge Agreement in commercial transactions.

  • Document Preparation: Draft agreement and supporting schedules for collateral and exceptions.
  • Review and Approval: Legal and credit teams confirm terms and perfection requirements.
  • Execution: Parties sign electronically or in-person; collect initials and dates.
  • Perfect and Record: File UCC-1 or record with county recorder as required by law.

How to configure an electronic signing workflow

Recommended configuration options reduce signer friction while preserving enforceability and auditability.

Field Configuration
Signature Type eSign with audit trail
Authentication Email + SMS code or stronger KBA
Order Specify signing order for lender then borrower
Retention Enable PDF export and audit log preservation

Technical requirements for eSigning a Charge Agreement

Ensure the chosen vendor offers record export, role-based access, and a Business Associate Agreement if HIPAA or health data will be involved.

  • Document Formats: PDF, DOCX supported
  • Integrations: Salesforce, NetSuite, Google Workspace
  • Security: TLS 1.2/1.3 and AES-256 encryption

Key clauses and provisions to include

These six elements are frequently decisive in enforcement, priority, and dispute resolution for Charge Agreements.

Collateral Schedule

A detailed exhibit identifying each asset or category subject to the charge and any exclusions.

Covenants

Affirmative and negative covenants protecting collateral value and borrower performance.

Default and Remedies

Events of default, acceleration, repossession, and sale procedures described clearly.

Perfection Clause

Obligations to file financing statements, record deeds, or take other steps to perfect the security interest.

Representations

Borrower statements on ownership, liens, and authority, often repeated at each advance.

Indemnities and Fees

Allocation of enforcement costs, attorneys’ fees, and recovery of expenses.

Common timing obligations and deadlines

Charge Agreements impose specific timing requirements for perfection, notice, and renewals; missing deadlines can affect priority and remedies.

Perfection Filing:

File UCC or record deed promptly to secure priority

Renewal/Continuation:

UCC-3 continuation typically within 6 months before lapse

Cure Periods:

Contractual cure windows vary; follow the agreement terms

Notice Periods:

Provide required pre-acceleration notices per contract

Document Retention:

Retain executed copies and filing receipts for audits

Key milestones from negotiation to enforcement

Sequence of milestones shows the lifecycle of a Charge Agreement from drafting through possible enforcement.

01

Term Sheet Agreement

Parties agree key economics and collateral structure before drafting.

02

Drafting and Review

Legal teams finalize collateral descriptions and perfection steps.

03

Execution

Signatures collected and dated by all authorized signatories.

04

Perfection Filed

UCC-1 or recording completed to perfect the security interest.

Common drafting and closing pitfalls to avoid

  • Vague collateral descriptions that fail perfection tests or lead to priority disputes.
  • Missing or late UCC filings that allow other creditors to gain priority.
  • Signatures by unauthorized signatories without corporate resolutions or authority documentation.
  • Inadequate audit trail for electronic signatures, undermining enforceability under ESIGN/UETA.

Consequences of errors in a Charge Agreement

Loss of Priority: Defeated by earlier-filed secured creditors
Unenforceability: Court may refuse remedies if formalities are missing
Damages Exposure: Liability for lender losses and collection costs
Regulatory Penalties: Industry fines where disclosures are required
Tax Consequences: Adverse classification of transfers for tax
Reputational Risk: Reduced lender confidence and higher borrowing costs

Representative eSignature pricing and capability comparison

Cost and capability differences matter when choosing an eSignature vendor for Charge Agreements; signNow is listed first per comparison conventions.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by vendor Varies by vendor Varies by vendor Varies by vendor
Bulk Send Yes (Business Premium) Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No
Envelope Cap No cap 100 envelopes/user/yr Varies Varies Varies

Real-world examples of Charge Agreement use

Examples show how different organizations structure security for lending and asset protection.

Commercial Loan Closing

A regional bank documents a floating charge on inventory and receivables during a working capital facility

  • Secured priority achieved by timely UCC-1 filing
  • The lender required monthly collateral reporting and a springing perfection clause to cover future assets, which reduced disputes at workout.

Equipment Financing

A lessor takes a fixed charge on medical equipment with serial numbers recorded

  • Lender records security interest and retains certificate copies
  • The explicit equipment schedule and recorded financing statement simplified repossession and resale after default, lowering recovery costs.

Practical tips for accurate Charge Agreement completion

Adopt these practices to reduce rework, ensure perfection, and protect priority.

Use Precise Descriptions
List serial numbers and legal parcel descriptions to avoid ambiguity in collateral identification.
Confirm Signer Authority
Attach corporate resolutions or LLC authorizations that evidence signing authority to the file.
Coordinate Filings
File UCC-1 and record deeds in the correct jurisdiction immediately after execution.
Preserve Audit Trails
When using eSignatures, keep PDF exports and the platform audit report showing signer identity and timestamps.

Frequently asked questions about Charge Agreements

Answers below address common concerns about enforceability, perfection, and electronic execution.


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