Depositary Agreement Definition

A depositary agreement is a legal document that defines the terms and conditions of a depositary relationship between two parties. The agreement outlines the duties and responsibilities of the depositary, who serves as the custodian of assets for the depositor. The depositor is the owner of the assets and entrusts them to the depositary for safekeeping.

The depositary agreement is commonly used in financial transactions, such as securities lending, where one party deposits securities with a depositary bank, which then lends them to a borrower. The agreement outlines the terms of the loan, including the interest rate and the duration of the loan.

The depositary agreement also specifies the circumstances under which the depositary may release the assets, such as upon the request of the depositor or if required by law. Additionally, the agreement may include provisions that address the liability of the depositary in the event of loss or damage to the assets.

Depositary agreements are typically governed by the laws of the jurisdiction in which they are executed. The agreement must comply with local laws and regulations, and any disputes or disagreements that arise will be resolved in accordance with the governing law.

Overall, depositary agreements provide a clear and concise framework for a depositary relationship and can help to mitigate risk and protect the interests of both parties. If you are considering entering into a depositary relationship, it is important to work with an experienced attorney who can help you draft a comprehensive and enforceable agreement that meets your specific needs.