Blocked Account Agreement

Summary

This precedent is a blocked account agreement, or control account agreement that an asset-based lender may require. It contains practical guidance and drafting notes. A block account agreement or control account agreement, is an agreement which a lender will have with the bank that holds a collection account into which the borrower is required to direct all collections. Most banks have a standard form that they prefer to use; in the absence of a bank form, this precedent provides guidance on the issues to be addressed. For more information on negotiation terms and content of asset-based loans, see Asset-Based Loans and Asset-Based Financing. For more information on cash management arrangements, see practice note: Cash Management Arrangements.