Jurisdiction(s):
United Kingdom

Key definition

Direct Agreement definition

What does Direct Agreement mean? A direct agreement is a contract used in project finance, PPP/PFI and construction to give a funder or public authority a direct relationship with a contractor, key sub-contractor or consultant (the promisor). It is a descriptive market term, not defined by statute or case law, and its use is broadly consistent across England and Wales, Scotland, Northern Ireland and Ireland. Typically executed as a deed in England and Wales, Northern Ireland and Ireland (and as a formally executed written agreement under Scots law), it grants the beneficiary (for example the Authority or the lenders) direct rights and remedies...

Project finance direct agreements: key provisions on security acknowledgement, step‑in and standstill rights, amendment restrictions, and counterparty representations and benefits

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Practice notes

What is a Direct Agreement?

Direct agreements are commonplace in project finance transactions. A direct agreement grants the project’s lenders direct rights in relation to a key project document (for the meaning of 'project document', see Project documents—issues for lenders—overview). Those rights are outlined in Direct agreements—key provisions below. For an illustration, see Precedent: Form of Contractor Direct Agreement in favour of a lender (for use on infrastructure and energy projects).

The relevance of project documents

Project documents are the contracts that allocate each party’s responsibilities on a project, and the outcome of most projects frequently hinges on them. For a project that has not yet been constructed, one of the Project company’s (for the meaning of 'project company', see Practice Note: Project finance—key project parties) most valuable assets will be its rights under the construction contract. Once the project is fully built, documents of particular value typically include the operation and Maintenance contract, as well as any supply and off-take contracts...

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Web page updated on 21/05/2026

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