A facility agreement – the agreement between the borrower and the lender that documents the credit facilities – will generally include a precedent clause. The conditions themselves are then indicated in a calendar. The terms of the precedent should normally be ”satisfactory in terms of form and content for the lender.” When this text is added, the borrower should ensure that it receives written confirmation from the lender if all the conditions are met, so that there is no dispute as to whether the lender was satisfied or not. Merger and acquisition transactions may have preconditions that govern payment terms. A company acquired as a subsidiary may be called upon to produce results for a new product or to generate a specified revenue within a specified time frame. Once these conditions are met, the next tranche of acquisition payments is made. When a reference document is required to be certified, a duly qualified director or the borrower`s secretary (or, if applicable, the borrower`s lawyers) must certify, on the basis of the document, that it is a ”true, correct and current copy” at the relevant time (i.e.dem day of the loan being granted). In some cases, the terms of the precedent may be established if they are not related to the purpose of the contract. Think of a professional who instructs a ghost writer to write a book for him. The expert requires that the author chosen not meet the budgetary obligations to be paid in full during the written period. In this case, the conditions are the completion of the book and the non-compliance with budgetary obligations during the writing period of the book.
This last condition can be abandoned if the scribe successfully produces the final supplies to the satisfaction of the expert. In 1908, a similar case was submitted to the New York court and the judge ruled in favor of the writer. For example, a mortgage agreement in real estate will have a precondition for the need for an inspection to assess the condition and value of the property. This assessment must be agreed upon by both the buyer and the lender before the mortgage agreement comes into effect. Precedents are also very common in wills and trusts, when the transfer of money or capital is only made when certain provisions are fulfilled, such as a couple. B married or a certain age. A waiver letter simply confirms that, notwithstanding the terms of the loan agreement, the lender no longer requires the borrower to meet certain conditions and not waive them. This can also be done by removing the conditions removed from the timetable of the facility agreement, but it also depends on the finalization of the facility agreement. A pre-condition case is an event that must occur before a contract can be executed.
Lenders often require borrowers to provide specific documents and/or information (for example. B, constitutional documents or up-to-date financial information) of the company before making funds available.