Gin and tonic clause meaning

A “gin and tonic clause” is a joint venture deadlock resolution step requiring the most senior representatives of each venturer—typically the chair or chief executive officer—to meet face to face to try to resolve a board or shareholder deadlock informally. It is a practitioner’s expression rather than a term defined by legislation or case law, and is commonly used in shareholders’ agreements and joint venture agreements. The clause is usually triggered when the JV board cannot agree (or, where the JV parties are in corporate groups, when shareholder-level decision-making stalls). It mandates prompt escalation to senior management, often with a stated timeframe, identified attendees and a requirement to confer in good faith. It does not normally confer a casting vote; instead it precedes more formal mechanisms (for example mediation, expert determination, buy–sell provisions such as Russian roulette or Texas shoot-out, or termination/wind-up). To maximise enforceability, drafting typically focuses on clear procedural steps rather than open-ended “agreements to agree”. Usage and effect are broadly consistent across England & Wales, Scotland, Northern Ireland and Ireland. In practice, it is an early, relationship-preserving escalation tool within a wider deadlock resolution framework.