Swap Agreement Sample

A swap agreement is a contractual agreement between two parties to exchange one financial instrument or asset for another on predetermined terms. In the world of finance, swap agreements are becoming increasingly popular as they enable companies to manage risks associated with interest rate fluctuations, currency rate changes, and commodity price movements.

To ensure that swap agreements are legally enforceable and protect both parties, it is essential to have a well-drafted swap agreement. In this article, we will provide you with a sample swap agreement to help you understand the essential components of this type of contract.

Before we delve into the sample agreement, it is important to note that swap agreements are complex financial instruments and should only be entered into by parties who fully understand the risks involved. Make sure you seek professional advice before entering into any swap agreement.


This Swap Agreement (“Agreement”) made as of _______ (date) between _______ (Party A) and _______ (Party B).

WHEREAS, Party A and Party B desire to engage in a swap transaction, the terms of which are set forth herein.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, Party A and Party B agree as follows:

1. Definitions

1.1. “Effective Date” means the date this Agreement is executed by both parties.

1.2. “Swap Transaction” means the exchange of one financial instrument or asset for another between Party A and Party B.

1.3. “Notional Amount” means the amount of the underlying asset that the parties have agreed to exchange.

1.4. “Payment Amount” means the payment that Party A or Party B must make to the other party under this Agreement.

2. Swap Transaction

2.1. On the Effective Date, Party A agrees to pay Party B the Payment Amount specified in Schedule 1.

2.2. In exchange, Party B agrees to pay Party A the Payment Amount specified in Schedule 1.

2.3. The Swap Transaction will be settled on the settlement date specified in Schedule 1.

3. Representations and Warranties

3.1. Party A and Party B each represent and warrant to each other that:

(a) it has the power and authority to enter into and perform its obligations under this Agreement;

(b) it has taken all necessary action to authorize the execution, delivery, and performance of this Agreement;

(c) it has obtained all necessary consents and approvals to enter into this Agreement; and

(d) this Agreement constitutes a legal, valid, and binding obligation of each party, enforceable against it in accordance with its terms.

4. Indemnification

4.1. Party A and Party B agree to indemnify, defend, and hold each other harmless from and against any and all claims, liabilities, damages, and expenses (including reasonable attorneys` fees and expenses) arising out of or in connection with any breach of this Agreement.

5. Termination

5.1. Either Party may terminate this Agreement upon written notice to the other party if:

(a) the other party breaches any material provision of this Agreement, and such breach is not cured within ten (10) days after written notice of such breach or

(b) a party becomes insolvent or bankrupt or ceases to carry on its business.

6. Miscellaneous

6.1. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

6.2. This Agreement shall be governed and interpreted by the laws of _______ (state/country).

6.3. This Agreement may only be amended or modified in writing signed by both parties.

In conclusion, a swap agreement is a critical document in executing a swap transaction. The sample agreement above provides a basic understanding of the key elements of a swap agreement. However, we strongly recommend seeking the advice of a legal professional when drafting a swap agreement. Failure to do so may result in potential legal and financial risks.

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