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Simple English definitions for legal terms
trust indenture
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A quick definition of trust indenture:
A trust indenture is a legal document that outlines the terms and conditions of a bond or loan agreement between a borrower and a lender. It is like a contract that ensures the borrower will repay the loan and the lender will receive their money back with interest. The trust indenture is usually held by a third-party trustee who oversees the agreement and ensures that both parties follow the terms outlined in the document.
A more thorough explanation:
A trust indenture is a legal document that outlines the terms and conditions of a bond or debt agreement between a borrower and a lender. It is a type of indenture, which is a written agreement between two parties.
For example, a company may issue bonds to raise money for a new project. The trust indenture would specify the interest rate, repayment terms, and other details of the bond agreement. It would also establish a trustee, who would act as a neutral third party to ensure that the terms of the agreement are followed.
The purpose of a trust indenture is to protect the interests of both the borrower and the lender. By establishing clear terms and appointing a trustee to oversee the agreement, both parties can have confidence that the agreement will be honored.