Powered by Lexis+®
Jurisdiction(s):
United Kingdom
CASE STUDY

“LexisNexis is great as I can find the answers I am looking for really quickly. I believe that nothing should be more than 6 clicks away - and the products from LexisNexis deliver on this standard”

Avensure

Access all documents on Failure costs agreements

Failure costs agreements meaning

What does Failure costs agreements mean?
A failure costs agreement is an arrangement under which one party (commonly the target) agrees to reimburse another party’s properly incurred costs if a proposed transaction does not complete. It is a descriptive term, not defined by statute or case law, and is used across corporate transactions. It differs from a break fee or inducement fee (a fixed sum payable on failure): failure costs reimburse actual, evidenced abort costs. Public takeovers: In the UK (England & Wales, Scotland and Northern Ireland), such arrangements are generally prohibited as “offer‑related arrangements” under the Takeover Code (Rule 21.2), save for the limited expense reimbursement exception requiring Panel consent, a cap (typically not exceeding 1% of offer value), coverage of specified identifiable costs only, disclosure and narrowly drafted triggers. Ireland takes a similar approach under the Irish Takeover Rules and Irish Takeover Panel practice. Private M&A and other deals: Failure costs agreements are commonly used and usually enforceable if they reimburse genuine third‑party costs and are proportionate, to avoid engaging the penalty doctrine (cf. Cavendish v Makdessi). Key drafting points include: clear failure triggers (e.g. competing offer, shareholder vote against, change of recommendation, regulatory refusal), capped recoveries, defined cost categories (advisers, diligence, financing), evidence requirements, timing...
Speed up all aspects of your legal work with tools that help you to work faster and smarter. Win cases, close deals and grow your business–all whilst saving time and reducing risk.

View the related News about Failure costs agreements

NEWS
Entain DPA: UK enforcement landscape, CPS momentum and due diligence for gambling, acquisitions and third‑party risk

Second only in size in the UK to the 2020 global Airbus SE corruption settlement, Entain has acknowledged the corporate offence of failing to prevent bribery as part of a deferred prosecution agreement (DPA). It accepts the alleged shortcomings arising from previous GVC Holdings management missteps. Under the DPA announced on 5 December 2023, the package includes Entain’s agreement to cover HMRC and CPS investigation costs of £10m and to make a £20m charitable payment. Entain is also required to cooperate fully and in good faith with the CPS on any and all matters linked to the conduct at the centre of the underlying allegations, and to take all reasonable steps to implement revisions to its ethics and compliance programme where required. This article outlines the UK’s DPA framework and sets out practical learning points for companies facing third-party risk, with a particular focus on those operating in the betting and gaming sector. Significance of the DPA A DPA is a discretionary mechanism available in the UK to...

Read More Right Arrow
NEWS
Dispute Resolution Weekly: Key Court of Appeal rulings (N510, injunctions, advocates’ immunity), MTIC fraud defeat, Arbitration Act s43–44 limits, HMCTS updates, PACCAR reform push, UK mediation convention consultation

In this issue: Key DR developments Claims and remedies Costs and funding Cross-border disputes Injunctions Litigation Applications—specific Evidence and disclosure Dates for your diary Useful information Daily and weekly news alerts Key DR developments Appointments The Law Society of England and Wales has confirmed Mark Evans as its 181st president, with Brett Dixon appointed vice president and Dana Denis-Smith taking the role of deputy vice president. Evans, a Welsh solicitor bringing 28 years’ expertise in property and private law and currently lecturing at the University of Law, has held senior positions within regional and national law societies since 2010. For further information, see: LNB News 09/10/2025 35—Law Society appoints Mark Evans as 181st president. Hague Conference on Private International Law The HCCH has moved forward its Good Practices document concerning the 1965 Service, 1970 Evidence and 1980 Access to Justice Conventions. This follows the second meeting of its Working Group...

Read More Right Arrow
NEWS
Weekly PI and Clinical Negligence: CJC PAP reforms; costs budgeting and Part 36; misrepresentation in settlements; MoJ 2023–24 report; SRA in-house guidance (England and Wales)

PI & Clinical Negligence weekly highlights—21 November 2024 In this issue: Pre-action Case management Other PI and Clinical negligence news Daily and weekly news alerts LexTalk® PI & Clinical Negligence: a Lexis®Nexis community LexisNexis® Webinars Useful information Pre-action CJC completes comprehensive review of pre-action protocols with two-phase report The Civil Justice Council (CJC) has finalised its extensive appraisal of pre-action protocols (PAPs), issuing a two-phase report. The first instalment, in August 2023, analysed PAPs’ role within civil justice and considered the scope for digitising pre-action activity. The second phase, released in November 2024, proposes major updates to PAPs covering personal injury, clinical disputes, disease and illness claims, and package travel claims. Headline proposals include clearer structure and navigation, standardised sections across protocols, refreshed ADR guidance to reflect the Churchill decision, and bolstered disclosure obligations. The CJC also highlights the need for explicit objectives, stronger dialogue between parties, and proper consideration of vulnerability. It further recommends...

Read More Right Arrow

View the related Practice Notes about Failure costs agreements

PRACTICE NOTES
2022 appeal round-up and tracker: key civil litigation decisions and forthcoming Supreme Court cases (England and Wales)

Practice Note This Practice Note consists of two strands created to help dispute resolution practitioners remain up to date with developments in case law that affect their field, or which influence civil litigation procedure more generally: selected forthcoming appeals to the Supreme Court are highlighted below; see Key forthcoming appeals to the Supreme Court—2022 summaries of significant appeal decisions in England and Wales (ie rulings of the Court of Appeal and Supreme Court and, where appropriate, certain judgments of the Competition Appeal Tribunal, Judicial Committee of the Privy Council, Court of Justice of the European Union), and ECtHR, which we have covered; see: Key forthcoming appeal cases—2022 You can navigate this content using the table of contents in the left-hand margin. Alternatively, search this tracker using [CTRL]+[F]. This material is not intended to be a comprehensive register of every appeal or major decision relevant to dispute resolution practitioners. Key forthcoming appeals to the Supreme Court—2022 Tort and negligence ...

Read More Right Arrow
PRACTICE NOTES
2016 appellate civil litigation round-up: key Supreme Court, Court of Appeal and Privy Council decisions on procedure, contract, tort, costs, jurisdiction and remedies

Court of Appeal—professional negligence ARCHIVED : This Practice Note has been archived and is not maintained. The Court of Appeal upheld an appeal in a claim against solicitors, holding that the loss of a chance head of damage was too remote. At first instance, the judge concluded that Lewis Silkin LLP had fallen below the required standard by not advising their client to include a jurisdiction provision in his employment agreement with a franchisee involved in the Indian Premier League’s Twenty20 competition. Because no jurisdiction clause appeared in the contract, when the client later issued proceedings against the franchisee over a severance entitlement, he faced jurisdictional challenges (ultimately dismissed) brought by the franchisee, which postponed his obtaining judgment for £10 million in severance. The client’s case was that, with proper advice on jurisdiction, the contract would have contained an exclusive jurisdiction clause. On that footing, he said, he would have secured judgment for the severance sum sooner (as there would have been no hold‑ups arising from jurisdiction objections) and...

Read More Right Arrow
PRACTICE NOTES
Residential service charge consultation under s.20 LTA 1985: qualifying works, long-term agreements, procedures, dispensation and limits on recovery (England and Wales)

Overview of consultation process The flowchart below sets out a straightforward overview of the matters to weigh up when deciding whether consultation is required and, if so, the sequence of steps to follow. It is not a replacement for the fuller guidance that appears below, which should be consulted at every stage. When do the consultation requirements apply? The landlord must consult with tenants before any of the following occur: carrying out qualifying works that will mean the contribution of any tenant towards those works exceeds £250, or entering into a qualifying long-term agreement where the costs will result in the contribution of any tenant being more than £100 within any 12-month accounting period This process is often informally called 's 20 consultation', a shorthand derived from sections 20–20ZA of the Landlord and Tenant Act 1985 (LTA 1985). Its purpose is to ensure that, where a landlord plans to undertake either qualifying works or to enter into a qualifying...

Read More Right Arrow