Conditions precedent Definition

GLOSSARY

Published by a UU��ֱ�� Banking & Finance expert

What does Conditions precedent mean?

In leveraged finance transactions, conditions precedent are commonly split into conditions precedent to signing and conditions precedent to closing. Conditions precedent to signing are conditions that must be satisfied by the borrower before the facility agreement can take effect. Conditions precedent to closing are conditions which must be satisfied by the borrower before it is entitled to draw down funds under the facilities agreement.

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ISDA documentation in a finance transaction—checklist

ISDA documentation in a finance transaction—checklist This checklist sets out the key ISDA documentary requirements which need to be considered during the course of a financing transaction. Term sheet stage • if acting for a borrower and specialist hedging advisors are instructed, get their input on the term sheet • if acting for a borrower, ensure that the overall pricing of the transaction is understood (across both the loan and the hedging). A borrower may choose a particular lender based on a low margin offered on the loan, but then find that the credit spread on the swap offered by the same lender means that the overall economics of the transaction are less attractive than those offered by a different lender • is the loan and hedging on an IBOR basis (eg EURIBOR) or on a risk free rate (eg SONIA)? Will the loan transition from an IBOR to a RFR during its term and, if so, how will the hedging be dealt with? • does the lender require a...

Drafting terms for the sale of goods—business to business—checklist

Drafting terms for the sale of goods—business to business—checklist This Checklist is for drafting terms and conditions for the sale of goods. It sets out the key considerations when drafting business-to-business (B2B) standard form terms and conditions or a contract for the sale of goods. It considers the legal, regulatory and practical issues around the sale and supply of goods and is drafted with a seller/supplier bias. For general guidance on contracts for the sale of goods, see Practice Notes: Contracts for the sale and supply of goods—business to business and Implied terms in contracts for goods and services. For general guidance on key terms in commercial contracts more broadly, see Practice Note: Key terms and conditions in commercial contracts. General considerations Speak to departmental representatives within the business to establish any concerns they have and any customer feedback that should be addressed in the terms. Understand how the goods will be provided and any back-end processes, eg for delivery or returns, which need to be reflected in the terms....

Power purchase agreement (PPA)—Checklist

Power purchase agreement (PPA)—Checklist Power purchase agreements (PPAs) and consequently the checklist issues that arise will vary depending on a number of factors, including the type of energy generating technology utilised and, particularly, whether or not feedstock or fuel is required for operation of the completed facility. Whether the PPA, a short-term trading arrangement or a longer-term arrangement needed to underpin financing will also have a significant impact. This Checklist assumes a ‘conventional’ PPA where the counterparty is a licensed supplier. There are other variants, including corporate PPAs where the counterparty is an end-use customer, possibly connected to the generating facility by a direct wire. For more information about corporate PPAs, see Practice Note: Corporate Power Purchase Agreements—an introduction to structuring power purchase arrangements between large energy users and remotely located generators. What is/check the duration of the agreement? Where a PPA is required to underpin the external financing of a new generating facility, the term of PPA should coincide, so far as practicable, with the terms of any loans...

Recovering retention—checklist

Recovering retention—checklist This Checklist sets out the key issues to consider when dealing with the payment or recovery of retention monies. It assumes that the contract is subject to the HGCRA 1996 and primarily refers to employer–contractor retention monies, although the same issues also apply to contractor–sub-contractor retention monies. See Practice Note: Retention of payment in construction contracts for an explanation of retention, when it is usually paid, and the way retention is dealt with under JCT and NEC contracts. • What does the building contract say? At the outset, check the provisions of the building contract surrounding retention. The most common arrangement is that the retention monies are due in two halves: the first 50% is payable after practical completion of the works, and the remainder after completion of any defects notified during the defects period. Building contracts expressly state that the retention should be held on trust. Even if they do not make this provision, case law implies this requirement. However, a common amendment is to remove the...

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Short-form facility agreement (term loan): single company borrower—bilateral—unsecured

Short-form facility agreement (term loan): single company borrower—bilateral—unsecured Facility agreement This Agreement is made on [date] Parties 1 [insert name of Borrower], a company incorporated in England and Wales with registered number [insert company number] whose registered office is at [insert address] (the Borrower); and 2 [insert name of Lender], of [insert address] (the Lender). It is agreed as follows: 1 Definitions and interpretation 1.1 In this Agreement, unless otherwise provided: Business Day • means a day, other than a Saturday, Sunday or public holiday, on which banks are open for business in London; Commitment • means £[•] ([•] Sterling) minus any amount reduced or cancelled in accordance with this Agreement; Commitment Period • means the period commencing on the date of this Agreement to and including [•]; Default • means an event that with the giving of notice, lapse of time or other applicable condition would be an Event of Default under Clause 16; Drawdown • means [the OR a] utilisation of the...

Section 25 notice—landlord opposing renewal (with grounds) under LTA 1954

Section 25 notice—landlord opposing renewal (with grounds) under LTA 1954 These drafting notes are for use when completing a landlord’s section 25 notice opposing renewal (with grounds) under the Landlord and Tenant Act 1954 (LTA 1954). They are intended to be used when completing the prescribed form under the Landlord and Tenant Act 1954, Part 2 (Notices) Regulations 2004, SI 2004/1005, which is available here. It is good practice to serve the notice in duplicate and ask the receiving party to endorse and return the duplicate copy to acknowledge receipt. General A business tenancy automatically continues after the initial lease expires under the Landlord and Tenant Act 1954 (LTA 1954). A ‘business tenancy’ is one where property is occupied for the purposes of a trade or profession (see LTA 1954 business lease renewal—termination—Meaning of 'occupied for the purposes of business') unless it is one of 17 types of excluded tenancies (see: LTA 1954 business lease renewal—termination—Excluded tenancies), or where occupation is as licensee or tenant at will. Under LTA...

Dive into our 68 Precedents related to Conditions precedent

What is the logic, under the Loan Market Association leveraged facility agreement, for the split in conditions precedent (CP) between 'CPs to signing the agreement' and 'CPs to initial utilisation'? Further, in circumstances where a share sale and purchase agreement will be signed and the acquisition will complete on the same day, is such a split in CPs under the facility agreement necessary?

What is the logic, under the Loan Market Association leveraged facility agreement, for the split in conditions precedent (CP) between 'CPs to signing the agreement' and 'CPs to initial utilisation'? Further, in circumstances where a share sale and purchase agreement will be signed and the acquisition will complete on the same day, is such a split in CPs under the facility agreement necessary? The convention of splitting conditions precedent (CPs), into ‘CPs to signing the agreement’ and ‘CPs to initial utilisation’, reflects the fact that company acquisitions typically involve a split ‘exchange’, where the key documents are executed and the parties commit to the transaction (subject to certain conditions), and completion, where the money moves and the company or group legally changes hands. Certain CPs, such as corporate authorities, can be given prior to signing, while CPs such as security by the target group can’t be given until completion (the documents can be

What is the effect of an unsigned section 42 notice seeking a lease extension? Is the notice deemed withdrawn or invalid?

What is the effect of an unsigned section 42 notice seeking a lease extension? Is the notice deemed withdrawn or invalid? Any notice which is given by any tenants or tenant under Part I of the Leasehold, Reform, Housing and Urban Development Act 1993 (LRHUDA 1993) must be signed by or on behalf of each of the tenants, or (as the case may be) by or on behalf of the tenant, by whom it is given (LRHUDA 1993, s 99(5)). In Mannai v Eagle Star, the House of Lords upheld as valid a contractual break notice containing an obvious error on the ground that a reasonable recipient would not have been misled by the mistake. In the Court of Appeal case of York v Casey it was held that there was no material distinction between the approach to the validity of notices in a case involving a notice in a statutory context and the approach in Mannai in a contractual setting; as stated by Peter Gibson LJ:...

See the 79 Q&As about Conditions precedent

Questions & unsatisfactory answers—the European Commission publishes guidance on the importer requirements of the EU Methane Regulation

EU Law analysis: Alex Kerr, partner at Baker Botts LLP, examines the European Commission’s Q&A document on the importer requirements of the EU Methane Regulation.

ADGM Court Considers Arbitration Agreement with ‘UAE’ as seat (A15 and B15)

Arbitration analysis: In A15 v B15, the ADGM Court, presided by Justice Sir Andrew Smith, considered a recognition and enforcement application of an arbitral award. The arbitration clause in question specified that the place of arbitration was the ‘UAE’. The court determined that the seat of arbitration was Dubai, not the ADGM. Judgments from parallel proceedings in Umm Al Quwain and Dubai Court of Appeal relating to the same award were considered. The court decided to adjourn the recognition and enforcement application pending a decision of the Dubai Court of Cassation in set-aside proceedings, on the basis that the court may refuse enforcement if the award has been set aside at the seat of arbitration. The judgment underscores the importance of clearly defining the seat of arbitration in contracts. It also highlights the interplay between different jurisdictions and the necessity for strategic multi-jurisdictional planning in relation to arbitration cases. Written by Antonia Birt, partner at Reed Smith.

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