What is an indenture agreement?
An indenture is a particular formal contract or deed made between two or more parties. Beginning in medieval England, an indenture can be defined as a specific agreement within a contract noted with a specific duration or significance.
What are the examples of indenture?
A contract wherein someone agrees to work for you for two years if you help him come to America is an example of indenture.
Why is it called an indenture?
The term comes from the medieval English "indenture of retainer"—a legal contract written in duplicate on the same sheet, with the copies separated by cutting along a jagged (toothed, hence the term "indenture") line so that the teeth of the two parts could later be refitted to confirm authenticity (chirograph).
What does it mean to indenture someone?
To be indentured is to be forced to work by some contract. It started out as a word for a contract between masters and apprentices. Now it describes anyone bound to work, like it or not, because of some deal. Use the adjective indentured to describe someone who's bound or attached in a legal sense.
What is indenture sale deed?
In real estate, an indenture is a deed where the two parties agree to continue without obligations. For example, one party will agree to maintain a property, and the other will decide to make payments on it.
What is the opposite of indenture?
Antonyms. exempt refrain disoblige unlash unstrap untie unfasten. concavity cleft concave shape incurvation incurvature.
What types of restrictions should appear in a bond indenture?
Protective covenants usually provide at least the following provisions:pay the interest and principal of its bonds.specify when bonds can be presented for payment.maintain the collateral in good condition.insure the collateral against loss.defend the legal title to the property.More items...
What is a synonym for indentured?
In this page you can discover 6 synonyms, antonyms, idiomatic expressions, and related words for indentured, like: obligated, bound, enslaved, apprenticed, contracted and articled.
Is indentured servitude legal?
The 13th Amendment to the United States Constitution, which was passed after the Civil War, made indentured servitude illegal in the U.S. Today, it is banned in nearly all countries.
What is the difference between indenture and deed?
In real estate, an indenture is a deed in which two parties agree to continuing obligations. For example, one party may agree to maintain a property and the other may agree to make payments on it.
What is bond indenture and what does it contain?
Bond Indenture is a core legal document that safeguards the right of both investors and issuers. It contains all information related to the bond, along with the Rights and responsibilities of both issuer and bondholders.
What parties are usually associated with bond indenture?
Both the parties mean the contractor and contractee generally like to be associated with bond indenture because they can use bond indenture as legal proof. And also, the entity is legally liable to the other party if a bond indenture is made. In that indenture between both parties, agreement details are involved.
What type of document is the indenture agreement?
bond agreementsAn indenture is a legal and binding contract usually associated with bond agreements, real estate, or bankruptcy. An indenture provides detailed information on terms, clauses, and covenants.
How do you use indenture in a sentence?
Indenture in a Sentence 🔉The attorney had his client sign the indenture before officially beginning work on his case.A copy of the trust indenture can be found in a file with the company's other legal contracts.More items...
What is the meaning of indentured workers?
: a person who signs and is bound by indentures to work for another for a specified time especially in return for payment of travel expenses and maintenance.
Where were most indentured servants from?
When slavery ended in the British Empire in 1833, plantation owners turned to indentured servitude for inexpensive labor. These servants arrived from across the globe; the majority came from India where many indentured laborers came from to work in colonies requiring manual labor.
Example of Indenture
Now, let us look at some of the examples to illustrate the concept in more detail.
Types of Indenture
Now, let us look at the different types that we may encounter in a typical business setup.
Advantages of Indenture
It is a binding agreement, which means that all the involved parties are legally obliged to fulfil each other’s commitments as per the agreed conditions.
Disadvantages of Indenture
The terms and conditions of an indenture are strict and can’t be changed until the maturity of the contract. Hence, there is no flexibility for the involved parties as all the restraints play their part in the transactions.
Key Takeaways
In modern-day finance, an indenture refers to the legal agreement, deed, or contract between two or more parties that legally obliges the involved parties to honour their obligations as per the agreed conditions.
Conclusion
So, it can be seen that indenture is a very important part of any financial transaction. It helps in managing the covenants and the associated legalities of a transaction. It helps in safeguarding the interests of both the lender and the borrower.
Recommended Articles
This is a guide to Indenture. Here we also discuss the definition, examples, and types of Indenture along with advantages and disadvantages. You may also have a look at the following articles to learn more –
What is an indenture contract?
An indenture is a legal contract between two parties, particularly for indentured labour or a term of apprenticeship but also for certain land transactions. The term comes from the medieval English "indenture of retainer" — a legal contract written in duplicate on the same sheet, with the copies separated by cutting along a jagged (toothed, hence the term "indenture") line so that the teeth of the two parts could later be refitted to confirm authenticity ( chirograph ). Each party to the deed would then retain a part. When the agreement was made before a court of law a tripartite indenture was made, with the third piece kept at the court. The term is used for any kind of deed executed by more than one party, in contrast to a deed poll which is made by one individual. In the case of bonds, the indenture shows the pledge, promises, representations and covenants of the issuing party.
What is a bond indenture?
Modern usage. Bond indenture (also trust indenture or deed of trust) is a legal document issued to lenders and describes key terms such as the interest rate, maturity date, convertibility, pledge, promises, representations, covenants, and other terms of the bond offering.
Who is the trustee of a trust indenture?
Rather, the trustee in a "trust indenture" is a third party, usually a specialist company, who is appointed by the issuer to handle and safeguard the interests of the numerous public bondholders, in events ranging from the usual distribution of coupons and principal payments to dealing with the issuer's default, if any occurs.
When the agreement was made before a court of law, a tripartite indenture was made?
When the agreement was made before a court of law a tripartite indenture was made, with the third piece kept at the court . The term is used for any kind of deed executed by more than one party, in contrast to a de ed poll which is made by one individual. In the case of bonds, the indenture shows the pledge, promises, ...
What is an indenture in real estate?
Indenture is a term that is subject to different meanings. In the context of real property, it refers to a type of real property deed in which two parties agree to continuing mutual obligations. One party may agree to maintain the property, while the other agrees to make periodic payments. Indenture may also refer to a binding contract obligating ...
What is an indenture agreement?
Also, in a financial context, an indenture is a written agreement that describes the borrowers' responsibility to the lenders in a bond or debenture issue.
What is a trust indenture?
Commerce and Trade; Chapter 2a. Securities and Trust Indentures; Trust Indentures] the term indenture means “any mortgage, deed of trust, trust or other indenture, or similar instrument or agreement (including any supplement or amendment to any of the foregoing), under which securities are outstanding or are to be issued, ...
Types of Indentures
In real estate, an indenture is a deed where the two parties agree to continue without obligations. For example, one party will agree to maintain a property, and the other will decide to make payments on it.
Advantages of Indenture
It is a binding agreement, which means that all parties are legally obliged to fulfill their commitments according to the agreed conditions.
Tips for Indenture
In modern-day finance, an indenture also refers to the legal agreement, deed, or contract between two or more parties that legally will also oblige the involved parties to honor their obligations according to the agreed conditions.
What Is a Trust Indenture?
A trust indenture is an agreement in a bond contract made between a bond issuer and a trustee that represents the bondholder's interests by highlighting the rules and responsibilities that each party must adhere to. It may also indicate where the income stream for the bond is derived from.
What is a subordination clause in an indenture?
Almost all indentures include subordination clauses that limit the amount of additional debt that the issuer can incur, and that dictate that all subsequent debts are subordinated to prior debts. Without such restrictions, an issuer would theroretically be allowed to issue an unlimited amount of debt, increasing bondholders' exposure to default risk.
What is a special provision in a trust indenture?
Special Provisions of a Trust Indenture. Protective or restrictive covenants are highlighted in a trust indenture. For example, a trust indenture may indicate whether an issued bond is callable. If the issuer can “call” the bond, the indenture will include call protection for the bondholder, which is the period during which ...
What is a bond issued to?
Bonds are issued to lenders or investors to raise money for a corporation or governmental body. To issue a bond, the issuer hires a third-party trustee, usually a bank or trust company, to represent investors who buy the bond. The agreement entered into by the issuer, and the trustee is referred to as the trust indenture.
When was the Trust Indenture Act passed?
Many of the current rules regarding trust indentures were established by the Trust Indenture Act (TIA ), a piece of legislation passed in 1939 to protect bondholders and investors.
Is a trust indenture included in every bond contract?
Trust indentures may not be included in every bond contract, given that. some government bonds disclose similar information (the duties and. rights of the issuer and bondholders) in a document called the bond resolution . Many of the current rules regarding trust indentures were established by the Trust Indenture Act (TIA ), ...
Do you have to file a trust indenture with the SEC?
Corporate issues for less than $5 million, municipal bonds, and bonds issued by the government are not required to file trust indentures with the SEC. Of course, these exempted entities may choose to create a trust indenture to reassure prospective bond buyers, if not to adhere to any federal law.
Advantages of Indenture
- Some of the major advantages are as follows: 1. It is a binding agreement, which means that all the involved parties are legally obliged to fulfil each other’s commitments as per the agreed conditions. 2. It provides confidence to the lender that the chances of loss due to default are very low, and the transaction will take place smoothly without any major glitches. 3. It helps in authen…
Disadvantages of Indenture
- Some of the major disadvantages are as follows: 1. The terms and conditions of an indenture are strict and can’t be changed until the maturity of the contract. Hence, there is no flexibility for the involved parties as all the restraints play their part in the transactions. 2. There is a limited scope of exiting such contracts as these are non-transferable in nature. 3. The legal agreement, once s…
Key Takeaways
- Some of the key takeaways of the article are: 1. In modern-day finance, an indenture refers to the legal agreement, deed, or contract between two or more parties that legally obliges the involved parties to honour their obligations as per the agreed conditions. 2. Typically, an indenture provides various details about the credit offering, such as i...
Conclusion
- So, it can be seen that indenture is a very important part of any financial transaction. It helps in managing the covenants and the associated legalities of a transaction. It helps in safeguarding the interests of both the lender and the borrower.
Recommended Articles
- This is a guide to Indenture. Here we also discuss the definition, examples, and types of Indenture along with advantages and disadvantages. You may also have a look at the following articles to learn more – 1. Financial Leverage 2. Negative Covenants 3. Callable Bonds 4. Long Term Liabilities Example