Condition Precedent Facility Agreement

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. In some facilities agreements, conditions are required for any loan granted under the facility. For example, a facility agreement may be a framework agreement that authorizes the borrower to obtain funds for a number of real estate acquisitions. Each loan will therefore have its own precedent-based terms (such as real estate information and reports), but there will be some “Umbrella” conditions (such as the borrower`s business information) that can be obtained as a precedent for the first loan and should not be made available. 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. This is the most common use of previous payment terms in financial transactions. Preconditions are used to ensure that, before a borrower can obtain funds provided by a bank, the legal and commercial assumptions on which the bank based its lending decisions are met. 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.

Lenders often require a letter from their legal advisors confirming that the documentary conditions have entered the precedent and that they meet the terms of the facility agreement. This allows the lender to rely on the control of the documentary conditions by its lawyers. A facility agreement – the agreement between the borrower and the lender that documents the credit facilities – will generally include a precedent clause.