Condition precedent Definition

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GLOSSARY

Published by a ��Ƶ Commercial expert

What does Condition precedent mean?

A condition which delays the vesting of a right until the beginning of an event.

Commercial

A condition precedent in a commercial contract details an event which must take place before a contract, or a party's obligation(s) under a contract come into force. The contract, or the relevant obligation, does not become binding until the condition has been satisfied. In financing transactions, conditions precedent are the conditions that need to be fulfilled for funding to occur.

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Drafting a building contract/schedule of amendments—checklist

Drafting a building contract/schedule of amendments—checklist Once the procurement route and form of building contract has been selected (see Practice Note: Choosing the right procurement method—construction projects) the employer should consider the following matters and incorporate the appropriate drafting in the building contract particulars and schedule of amendments. This Checklist assumes that the parties are using a standard form of building contract, such as a JCT form, and that the employer is proposing the first draft including the completed contract particulars and a schedule of amendments, which amends the standard terms. This list is not exhaustive, however, and there may be other project specific matters/risks that need to be taken into account: Contractual matters • Carry out due diligence on the contractor The employer needs to carry out due diligence on the contractor at the outset to determine whether its financial position is acceptable. Confirm the contractor’s company number and name at Companies House. • Obtain consultants’ details Confirm the full details of the consultants engaged by the employer; some...

Corporate joint venture preliminary issues—checklist

Corporate joint venture preliminary issues—checklist Purpose of Checklist The purpose of this Checklist is to illustrate the preliminary considerations which need to be borne in mind and on which instructions will need to be sought, when considering entry into a joint venture (JV) arrangement where the JV vehicle is to be a private company limited by shares. It is for guidance only and is not exhaustive. This Checklist is prepared with the requirements of English law in mind and, although similar considerations are applicable in the case of an international JV arrangement, it is important to recognise the limitations of this Checklist in the context of a foreign JV vehicle. For further information, see Practice Note: Setting up a corporate joint venture—initial considerations. For a checklist on the key issues to consider when drafting the shareholders’ agreement/joint venture agreement (JVA), see Checklist: Joint venture shareholders’ agreement—checklist. Preliminary matters • Is a confidentiality undertaking required from either, both or all the parties or their affiliates? For a template confidentiality agreement, see...

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Conditions precedent in commercial contracts

This Practice Note considers the meaning and use of conditions precedent in commercial arrangements. It also considers typical conditions precedent and drafting issues.What are conditions precedent?A condition precedent in a commercial contract details an event which must take place before:•a contract, or•a party’s obligation(s) under a contractcomes into force. The contract, or the relevant obligation, does not become binding until the condition has been satisfied.In Nautica Marine Ltd v Trafigura Trading LLC, the judge distinguished between a ‘pre-condition’ to contract (which has the effect of preventing a contract coming into existence altogether) and a ‘performance condition’ (which does not prevent a binding contract coming into existence, but which if not satisfied means that performance does not have to be rendered). While each case will depend on its own individual facts and commercial context, an important determining factor is whether satisfaction of the condition depends on the decision of a contracting party or a third party. A condition is more likely to be a pre-condition than a performance condition where it...

Conditions precedent

In financing transactions, conditions precedent are the conditions that need to be fulfilled for funding to occur.This Practice Note explains:•the nature of conditions precedent•the different types of conditions precedent (ie documentary or factual)•what needs to be taken into account when determining whether the conditions precedent have been satisfied, and•what happens if the conditions precedent are not satisfiedThis Practice Note looks at the usual conditions precedent in a finance transaction at the time of:•first drawdown, and•future drawdowns throughout the life of the facilityWhere appropriate, this Practice Note highlights relevant provisions in Precedent: Facility agreement (term loan): single company borrower—bilateral—with or without security or a guarantee and the Loan Market Association (LMA) investment grade multicurrency term facility agreement (the LMA facility agreement) (available to LMA members on the LMA website).The LMA has a series of helpful user guides in the Documents & Guidelines section of its website which provide guidance on its documentation. Additionally, the Association of Corporate Treasurers (ACT) ACT Borrower’s Guide to the LMA’s Investment Grade Agreements contains useful guidance...

Discover our 44 Practice Notes on Condition precedent

Precedent signing and closing memorandum for a commercial mortgage-backed securities transaction

Precedent signing and closing memorandum for a commercial mortgage-backed securities transaction A Signing and Closing Memorandum is required to assist the smooth execution of a complex transaction. This precedent signing and closing memorandum sets out steps to be taken in order to close a commercial mortgage-backed securities (CMBS) transaction. Additional documents or steps may be required depending on the specific transaction. [ISSUER] [CURRENCY][AGGREGATE AMOUNT] CLASS [A] NOTES DUE [•] AND [CURRENCY] [AGGREGATE AMOUNT] CLASS [B] NOTES DUE [•] (THE NOTES) SIGNING AND CLOSING MEMORANDUM 1 Parties involved in the transaction THE PARTIES Issuer [●] Holdings [●] Originator [●] Arranger [●] Manager [●] Trustee [●] Security Trustee [●] Paying Agent [●] Account Bank [●] Cash Manager [●] Servicer [●] Special Servicer [●] Swap Counterparty [●] Liquidity Facility Provider [●] Registrar [●] Corporate Services Provider [●] [Listing Agent] [●] Listing Authority [●] Stock Exchange [●] [Rating Agencies] [●] Euroclear Euroclear Bank SA Clearstream Clearstream Banking, societe anonyme Common Depositary [●] Auditor [●] Valuer [●] Issuer's Counsel...

Ireland—Director’s certificate for a bilateral loan: borrower

Director's certificate This is a Precedent director’s certificate for use by the borrower of a bilateral facility. . What is a director’s certificate? Delivery of an original director's certificate is usually one of the conditions precedent in a facility agreement. Conditions precedent are the conditions that need to be fulfilled for funding to occur. They are included to provide the lender with a mechanism to ensure that, before funds are lent to the borrower: • certain documentary matters are dealt with, and • certain factual circumstances exist Documentary conditions precedent The documentary conditions precedent to lending are usually listed in a schedule to the facility agreement. ). As well as an original director’s certificate, documentary conditions precedent typically include certified copies of certain documents such as: • the constitutional documents and register of members and register of directors of the borrower, any guarantor and any party providing security for the transaction (a third-party security provider) • the board resolutions of the borrower, any guarantor and any third-party security...

Dive into our 22 Precedents related to Condition precedent

To what extent do arbitral tribunals (governed by English law) apply the Halsey approach following a failure to mediate under a tiered dispute resolution clause?

To what extent do arbitral tribunals (governed by English law) apply the Halsey approach following a failure to mediate under a tiered dispute resolution clause? The English courts have imposed costs sanctions on litigating parties who have unreasonably failed to mediate and one of the leading cases in this regard is Halsey v Milton Keynes General NHS Trust. See Practice Note: Costs consequences of refusing to consider ADR in civil proceedings for, among other matters, more information on that case and how it has been interpreted by the English courts in the context of litigation proceedings. One of public policy reasons for the English court’s decision to sanction parties in costs for unreasonable refusing to mediate in litigation is that the court resources are finite and, if possible, the parties should resolve their disputes without recourse to the courts or with limited court intervention. However, it may be suggested that no equivalent public policy exists in arbitration as arbitration is a private, consensual dispute resolution procedure...

Are you aware of any case law on what is required or constitutes compliance for the purposes of clause 2.27.1 of JCT Standard Building Contract 2011?

Are you aware of any case law on what is required or constitutes compliance for the purposes of clause 2.27.1 of JCT Standard Building Contract 2011? Clause 2.27.1 of the JCT Standard Building Contract 2011 (SBC) provides: 'If and whenever it becomes reasonably apparent that the progress of the Works or any Section is being or is likely to be delayed the Contractor shall forthwith give notice to the Architect/Contract Administrator of the material circumstances, including the cause or causes of the delay, and shall identify in the notice any event which in his opinion is a Relevant Event...' Lexis+® UK practical point: identical clauses are contained in the Standard Building Contract 2016 (cl 2.27.1) and the JCT Design and Build Contract 2011/2016 (cl 2.24.1), albeit that the reference to ‘Architect/Contract Administrator’ is replaced with the ‘Employer’ in the design and build contracts. There are two main issues to be considered when determining whether compliance with a notification provision such as clause 2.27.1 of the SBC...

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