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The contractually specified reason or event that allows the non-defaulting party to end the agreement.
An event of default is an event that is set out in a commercial contract, which gives the non-defaulting party the right to terminate the agreement. It is commonly used in finance transactions such as loan agreements or debt instruments. Examples of events of default include non-payment of interest, breach of covenant or insolvency.
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General meetings (including AGMs)—members’ rights—checklist The following table summarises and compares the relevant provisions of the Companies Act 2006 (CA 2006) in relation to the rights of members in relation to general meetings (GMs) (including annual general meetings (AGMs)). For more comprehensive information on the provisions see Practice Note: General meetings (including AGMs)—members’ rights. Member right Which company? Type of meeting Voting threshold Limits to provision Action to be taken by company Costs and expenses Requisition a GM and include proposed text of a resolution to be moved (CA 2006, s 303) All companies GM At least 5% of paid-up capital carrying right to vote at meeting. Request must state general nature of business to be dealt with and may include text of a resolution that may properly be moved. Request may be in hard copy or electronic form and must be authenticated. Resolution may not be moved if ineffective, defamatory, frivolous or vexatious. Directors to call GM within 21 days.Meeting to be held no more than 28 days...
Using IP as security: key issues—checklist This Checklist is drafted from the lender’s perspective, and it is designed to highlight the key issues to consider and steps to follow when using IP as security, such as to: • consider the nature of the IP right • consider the type of security • consider ownership, duration, and third-party rights • consider validity and maintenance of the right • value the IP right • consider associated rights and property • register the security at the appropriate registry For further information on taking or perfecting security over IP, see: • Practice Notes: Taking security over intellectual property rights, Taking security over intellectual property—practical points, Perfecting security over intellectual property rights and registering security at an intellectual property registry and Effect of registering security at IP registries on priority of security interests • Precedents: Assignment of intellectual property by way of security, Agreement for assignment of patent by way of security in pursuance of loan agreement: Encyclopaedia of Forms and Precedents (21(1)) [1172], Mortgage...
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This Practice Note provides an overview of contract expiry and of the different causes of termination and ways to discharge a contract, including their practical and legal consequences. It considers expiry, contractual rights to terminate (including common termination events), termination for breach of contract (including repudiatory breach), rescission, void contracts, discharge by agreement, frustration, force majeure, illegality, insolvency, discharge by other subsequent events (such as merger, alteration or death), and issues to consider in the context of terminating business-to-consumer contracts.A contractual promise may be discharged either in accordance with the agreement (for example, by performing the agreement or on the occurrence of a stipulated event such as the expiry of a fixed term) or against the agreement (for example, termination for breach of contract or rescission for misrepresentation).This Practice Note provides a brief overview of the different ways in which a contract may be brought to an end. The specific Practice Notes referenced in each section should be consulted for more detail.Causes for terminationThere are several ways in which a...
This Practice Note considers what liquidated damages clauses are and briefly when and how they are used. It then focuses, in particular, on the court's approach when determining whether a purported liquidated damages clause is, in fact, a penalty and therefore unenforceable; tracing the authorities through to how the question should now be approached in light of the 2015 Supreme Court Makdessi/ParkingEye decision and considering, in particular, issues such as when contractual provisions for accelerated receipt, default interest, or positive incentives may be considered as a penalty.What is a liquidated damages clause?A liquidated damages clause is a clause whereby the parties to a contract fix in advance a sum of money to be paid by the defaulting party to the innocent party in the event of a breach. The sum payable represents agreed damages (called liquidated damages) and is recoverable without the innocent party needing to prove the actual loss suffered.Liquidated damages clauses can therefore avoid the expense and difficulty of having to prove the actual damage suffered as a...
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Produced in partnership with DLA Piper UK LLP [ These clauses are intended for insertion in a Facility Agreement relating to the operation of a business, which involves the occupation of use of properties. It accordingly assumes the definition of terms which would typically be included in such an agreement, such as ‘Agent’, ‘Business’, ‘Event of Default’, ‘Finance Party’, ‘Legal Due Diligence Report’, ‘Material Adverse Effect’, ‘Obligor’ and ‘Property’.] Brexit impact As of exit day (31 January 2020) the UK is no longer an EU Member State. However, in accordance with the Withdrawal Agreement, the UK has entered an implementation period, during which it continues to be subject to EU law. This has an impact on this content. For further guidance, see Practice Note: Brexit—impact on environmental law and News Analysis: Brexit Bulletin—key updates, research tips and...
Short-form facility agreement (term loan): single company borrower—bilateral—unsecured Facility agreement This Agreement is made on [date] Parties 1 [insert name of Borrower], a company incorporated in England and Wales with registered number [insert company number] whose registered office is at [insert address] (the Borrower); and 2 [insert name of Lender], of [insert address] (the Lender). It is agreed as follows: 1 Definitions and interpretation 1.1 In this Agreement, unless otherwise provided: Business Day • means a day, other than a Saturday, Sunday or public holiday, on which banks are open for business in London; Commitment • means £[•] ([•] Sterling) minus any amount reduced or cancelled in accordance with this Agreement; Commitment Period • means the period commencing on the date of this Agreement to and including [•]; Default • means an event that with the giving of notice, lapse of time or other applicable condition would be an Event of Default under Clause 16; Drawdown • means [the OR a] utilisation of the...
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What recourse does a bank have if assets are disposed of in breach of the terms of the finance documents? Why is the restriction on asset disposals needed and what clauses should the bank consider in these circumstances? In a secured financing, the bank will be concerned to ensure that the value of its security is not reduced in any way during the term of the facility agreement, ensuring it maximises recoveries in the event it wants to enforce the security. Another key concern is that unless the bank can show sufficient control over any given secured asset, any purported fixed charge over that asset could be recharacterised as a floating charge. Therefore, it is usual for the bank to put restrictions into the facility agreement and related security documents preventing the borrower from selling, transferring or otherwise disposing of any of its assets during the term of the facility agreement without the consent of the bank. For more information, see Practice Note: Undertakings (covenants) —...
A rent deposit paid under a commercial lease is to be held on trust and the deposit entitles but does not require the landlord to withdraw from it in the event of default. Can the landlord elect to forfeit and then use the rent deposit to settle rent arrears after forfeiture? Background A rent deposit is a sum of money provided by a tenant to its landlord by way of security for: (i) payment of the rent; and (ii) performance of the covenants found in the lease. The rent deposit deed itself will, in the usual circumstances, set out in detail when a landlord can draw down against the rent deposit and the conditions that the tenant must meet before the rent deposit is repaid to it. The primary benefit of a rent deposit to commercial landlords is that it allows them to have access to an immediate source of funds that can be withdrawn when a tenant acts in a manner which amounts to a breach...
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Banking & Finance analysis: This News Analysis looks at the Lexis+® UK Banking & Finance team’s top ten cases for 2024. It should be noted that it is not an exhaustive list.
This week's edition of Banking and Finance weekly highlights includes: (1) RICS announces updated Red Book Global Valuation Standards; (2) AFME releases report on UK capital markets; and (3) European Commission publishes FAQs on the EU taxonomy for sustainable economic activities.
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