Listen to a Business English Dialogue About After acquired clause
Elizabeth: Hi Sean, have you ever heard about the “after-acquired clause” in business and finance?
Sean: Yes, Elizabeth. An after-acquired clause is a provision in a contract that gives the lender a security interest in any assets acquired by the borrower after the loan is made.
Elizabeth: Right, it means that if the borrower acquires new assets, those assets also become collateral for the loan.
Sean: Exactly, the after-acquired clause provides additional security for the lender and can help protect their interests in case the borrower defaults.
Elizabeth: It’s interesting how after-acquired clauses can be included in various types of contracts, such as loan agreements or commercial leases.
Sean: Yes, they’re commonly used in financing arrangements to provide lenders with recourse against additional assets if the borrower’s initial collateral is insufficient.
Elizabeth: And borrowers should carefully review the terms of contracts containing after-acquired clauses to understand their obligations and potential risks.
Sean: Absolutely, borrowers need to be aware of the implications of granting the lender a security interest in future assets.
Elizabeth: It’s also important for lenders to exercise caution when enforcing after-acquired clauses to avoid conflicts with other creditors.
Sean: Right, lenders should ensure that their rights under the after-acquired clause are clearly defined and enforceable.
Elizabeth: Overall, after-acquired clauses play a significant role in securing loans and protecting the interests of lenders in business transactions.
Sean: Indeed, they’re an important tool for managing risk and ensuring repayment in commercial lending arrangements.