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Representations Warranties And Covenants Notes

LPC Law Notes > Finance and Capital Markets Notes

This is an extract of our Representations Warranties And Covenants document, which we sell as part of our Finance and Capital Markets Notes collection written by the top tier of Cambridge And Oxilp And College Of Law students.

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Binding Obligation

Non- Conflict

What Borrower needs to state Must be duly incorporated under the law of its jurisdiction & has power to own its assets and carry out its business.The obligations undertaken in the agreement are legal, valid, binding and enforceable.Borrower will want to qualify this by any general principles of law which limit borrower's obligations & which are referred to in the legal opinion addressed to the bank. E.g. insolvency procedures, equitable principles or public policyBanks will want to resist the qualification applying to other representationsEntering into agreement will not conflict with any laws, regulations, their constitution or any other agreement/instrument they are party to.3rd party can sue bank in tort for 'procuring a breach of contractual relations' if this isn't included.Banks should make sure it isn't just limited to 'material breaches' as this will not protect them from tortuous claim.

Power &

Must have the power and authority to enter agreement and perform its obligations.

Validity and admissibility in evidence Governing law and enforcement??

Facility agreement is admissible in evidence in its jurisdiction of incorporation. Important if borrower is incorporated in different jurisdiction from governing law. May need government/regulatory authorisations (if extensive put in sch.) If parties need to sign doc. before authorisations are obtained, make it a condition precedent to utilise loan/get undertaking to obtain authorisation within specific timeframe

Law governing the facility agreement, & any judgment obtained in relation to it, will be recognised and enforced in the borrower's jurisdiction of incorporation.


What Borrower needs to stateDeduction of Tax?

Non filing of Stamp Duties No event of default??It is not required to deduct tax from payments made to banks which = 'Qualifying Lenders'. Ensures there is no withholding of tax imposed on interest payments meaning banks would get less then expected, or borrower having to increase interest payment under gross-up provisions. Not repeated Under UK law, stamp duty does not usually apply to loan agreements, but required to protect against charges to the UK Stamp Duty Regime, or against possible foreign duties which bank is unaware. Not usually repeated unless new borrowers accede the agreement There is no event of default continuing or which might reasonably be expected to occur as a result of the agreement. There is no event of default under any other of its agreements which would have a 'material adverse effect' (this is usually a defined term) on the agreement. Borrower will only negotiate over narrowing definition of ' material adverse effect'

BDF - WS 3 - Representations, Warranties and Covenants


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