Conditional contracts PDF

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Conditional contracts...

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Reasons for conditionality 

You need consents and approvals, and they will take a while – parties prefer to get the SPA signed and exchange immediately rather than wait. Applying for consents can make the acquisition public, and they will want things set in contract before this is done.

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Examples include HMRC clearance on reliefs, landlord consenting to assignment etc.

How do you allocate the increased risk of a conditional contract? Make the SPA clearly states 1. Obligation to purchase subject to satisfaction of conditions precedent. 2. Buyer may want to reserve right to waive those conditions. 3. Each party’s obligations? 

Usual to include a condition that one party will make best endeavours/take reasonable steps to try to procure the satisfaction of the conditions as early as possible.

4. When the CPs must be satisfied by 

Add a long stop date by which conditions must be satisfied (or waived by the party for whose benefit they are given).

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Add a default provision for the contract to terminate after this without liability for either party.

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If conditions are satisfied prior to the longstop date, a provision to complete earlier.

5. Is there a right to terminate before completion if a condition is not met?

See MyLpc which covers this particular topic well....