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The Acknowledgement of Debt Agreement is commonly used in Pakistani business and financial transactions when there is a need to formally document and confirm an existing debt obligation. This document is particularly useful in situations where a debt needs to be formally recognized, restructured, or when establishing clear repayment terms. It can be used for both personal and commercial debts, and is especially important in the Pakistani legal context where it can help prevent limitation periods from expiring under the Limitation Act 1908. The agreement provides creditors with strong documentary evidence for debt recovery while giving debtors clear terms for repayment. It must comply with Pakistani contract law, including the Contract Act 1872, and may need to consider Islamic banking principles depending on the nature of the transaction. The document typically includes details of the original debt, current amount owed, repayment schedule, and any applicable interest or profit rates.

1. Parties: Identifies and defines the Creditor and Debtor with their full legal names, addresses, and any registration details if companies

2. Background: Explains the context of the debt, including how it arose and any previous agreements or transactions

3. Definitions: Defines key terms used throughout the agreement

4. Acknowledgement of Debt: Clear statement of the debt amount and the Debtor's unequivocal acknowledgment of owing this sum

5. Repayment Terms: Details of how and when the debt will be repaid, including payment schedule, installment amounts, and payment methods

6. Interest/Profit Rate: Specification of any applicable interest or profit rate (ensuring compliance with Islamic banking principles if relevant)

7. Default Provisions: Consequences of missing payments or breaching the agreement terms

8. Representations and Warranties: Statements of fact by the Debtor regarding their ability to pay and the validity of the debt

9. Governing Law: Specifies that Pakistani law governs the agreement

10. Dispute Resolution: Process for handling any disputes that may arise

11. Execution: Signature blocks and execution requirements