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Third Party Payment Agreement for the United Kingdom

Third Party Payment Agreement Template for England and Wales

A Third Party Payment Agreement is a legally binding document governed by English and Welsh law that establishes the terms and conditions under which a third party agrees to make payments on behalf of another party to a designated payee. The agreement outlines payment terms, obligations, compliance requirements, and the rights of all parties involved, while ensuring adherence to relevant financial regulations and anti-money laundering requirements.

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Third Party Payment Agreement

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What is a Third Party Payment Agreement?

The Third Party Payment Agreement serves as a crucial document in situations where one party assumes payment obligations on behalf of another. Under English and Welsh law, this agreement provides legal certainty and protection for all parties involved, addressing payment mechanics, timing, default provisions, and regulatory compliance. It's particularly vital in commercial transactions, corporate restructuring, and financial arrangements where direct payment relationships need to be modified or reassigned. The agreement ensures clarity on payment obligations while maintaining compliance with UK financial regulations and anti-money laundering requirements.

What sections should be included in a Third Party Payment Agreement?

1. Parties: Identifies all parties to the agreement including the third-party payer

2. Background: Explains the context and purpose of the third-party payment arrangement

3. Definitions: Defines key terms used throughout the agreement

4. Payment Terms: Details of payment amounts, timing, and mechanisms

5. Obligations of Parties: Responsibilities of each party including payment, notification, and compliance duties

6. Term and Termination: Duration of agreement and termination provisions

7. Representations and Warranties: Standard representations and compliance with applicable laws

8. Governing Law and Jurisdiction: Specifies English and Welsh law as governing law and relevant jurisdiction

What sections are optional to include in a Third Party Payment Agreement?

1. Security Arrangements: Used when payment security or guarantees are required for high-value transactions or where credit risk exists

2. Anti-Money Laundering Compliance: Specific AML obligations and procedures for financial institutions or large payment arrangements

3. Force Majeure: Provisions for unforeseen circumstances affecting payments, recommended for long-term or high-value arrangements

4. Data Protection: GDPR and Data Protection Act 2018 compliance provisions where personal data is processed

5. Confidentiality: Provisions for maintaining confidentiality of payment and business information

What schedules should be included in a Third Party Payment Agreement?

1. Payment Schedule: Detailed breakdown of payment amounts and dates

2. Bank Account Details: Specified account information for payments

3. KYC Documentation Requirements: List of required documentation for compliance

4. Form of Payment Notices: Template notices for payment-related communications

5. Compliance Requirements: Detailed AML and regulatory compliance procedures and requirements

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Document Type

Payment Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions

























Clauses

























Industries

Contracts (Rights of Third Parties) Act 1999: Primary legislation governing how third parties can enforce terms of a contract. Essential for third party payment agreements as it determines enforcement rights and obligations of the third party.

Law of Property Act 1925: Fundamental legislation relevant for any security arrangements or property-related aspects within the payment agreement.

Bills of Exchange Act 1882: Legislation governing negotiable instruments and relevant if the payment agreement involves bills of exchange or similar payment instruments.

Payment Services Regulations 2017: Implements EU Payment Services Directive (PSD2). Regulates payment services and payment service providers, setting out key requirements for payment arrangements.

Money Laundering Regulations 2017: Sets out anti-money laundering requirements and Know Your Customer (KYC) obligations that may need to be addressed in the agreement.

Financial Services and Markets Act 2000: Regulatory framework for financial services in the UK, relevant if the agreement involves regulated financial activities.

Doctrine of Consideration: Common law principle requiring that all parties provide something of value in the contract. Essential for ensuring the agreement is legally binding.

Privity of Contract: Common law principle concerning the relationship between parties to a contract and their rights to enforce it.

Agency Principles: Common law principles governing relationships where one party acts on behalf of another, relevant for third party payment structures.

Consumer Credit Act 1974: Relevant if the payment agreement involves consumer credit arrangements or consumer transactions.

Consumer Rights Act 2015: Applicable if the agreement involves consumers, setting out consumer protection requirements.

GDPR and Data Protection Act 2018: Data protection legislation that must be considered for aspects of the agreement involving personal data processing and storage.

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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