Potential default meaning

In a share sale, the purchaser acquires control of the company that operates the business (the target), along with all its assets, and by default steps into all of its obligations and both known and potential liabilities. Findings in legal due diligence and the share purchase agreement can identify particular environmental, health & safety (EHS) matters to be addressed after completion. These may range from an obligation to commission an environmental audit through to the preparation of an asbestos management plan...

Practice Note: Contract interpretation—distinguishing between liquidated damages and penalty clauses As highlighted in this Practice Note, working out whether a liquidated damages provision will be struck down as a penalty is seldom straightforward and often demands careful judgment. Although each dispute turns on the court’s construction of the contract, there are several points to weigh when examining the ambit of a supposed liquidated damages term and its potential exposure to a penalty challenge, both in substance and effect. When you are drafting such a clause, it is vital to keep these considerations in view, and to think about how it sits alongside connected provisions, including any related terms that operate with it. See: Drafting and negotiating a liquidated damages clause—checklist Precedent: Liquidated damages clause For targeted analysis of the way authorities have treated provisions in commercial agreements that stipulate ‘default interest’, see the following materials: Penalty interest rates in commercial contracts Contract interpretation—distinguishing between liquidated damages and penalty...

In this issue: Key DR developments Claims and remedies Costs and funding Cross-border disputes Case management Settlement Civil appeals New content Dates for your diary Useful information Collaborate and network with a community of expert lawyers Daily and weekly news alerts Key DR developments Announcements Government response to consultation on reforming UKSC fees: The Ministry of Justice (MoJ) has issued its post-consultation reply on proposed changes to fees in the UK Supreme Court (UKSC). The document sets out the context to the paper, distils the feedback received, addresses in depth the particular questions put forward, and outlines the intended actions following the consultation. It also restates the report’s background, condenses the submissions, responds comprehensively to discrete queries, and sets out the immediate next steps. Respondents highlighted three principal worries: whether a 40% uplift in fees can be justified, the potential consequences of higher fees on access to justice, and how...

Re XX v GH (Legal Services Act 2007 Exemption) [2026] EWFC 51 (B) What are the practical implications of this case? The ruling of HHJ Farquhar in Re XX v GH (Legal Services Act 2007 Exemption) [2026] EWFC 51 (B) underscores that, while the Court of Appeal’s decision in Mazur v Charles Russell Speechlys LLP (The Solicitors Regulation and The Law Society of England and Wales, intervening) [2025] EWHC 2341 (KB) (Mazur) is awaited, family courts will not regard exemptions under LSA 2007, Sch 3—by which a court may permit a non-authorised person to conduct litigation or hold a right of audience in particular proceedings—as a convenient default. Following Mr Justice Sheldon’s judgment in Mazur, mere oversight by a solicitor no longer suffices, and absent litigation rights, a chartered legal executive cannot conduct litigation; dispensations will be reserved for truly exceptional situations only (see paras [36] to [38]). Factors such as a client’s preference, issues of expense, potential delay, or disturbance to ongoing matters are inadequate grounds (see para...

In this issue: UK, EU and international regulators and bodies Authorisation, approval and supervision Prudential requirements Financial crime and sanctions Consumer protection Conduct requirements Complaints, compensation and claims management Investigations, enforcement and discipline Regulation of benchmarks and IBOR reform Regulation of capital markets Dispute resolution for financial services lawyers Regulation of derivatives Banks and mutuals Investment funds and asset management Regulation of insurance Payment services and systems International—financial services and related sectors Fintech and cryptoassets Regulation of AI in FS LexTalk®Financial Services: a Lexis®Nexis community Financial Services Enforcement Database Daily and weekly news alerts Intraday news alerts New and updated content Dates for your diary Latest Q&As UK, EU and international regulators and bodies FCA names Sarah Pritchard as deputy chief executive The Financial Conduct Authority (FCA) has selected Sarah Pritchard as deputy chief executive to guide...

This Practice Note looks at: the principal features of loan to value (LTV) covenants in secured lending transactions possible issues with calling an event of default arising from a LTV covenant breach potential challenges to an event of default based on a LTV covenant breach remedying a LTV covenant breach the impact of the economy on LTV covenant breaches LTV covenants are a vital element of risk management in secured lending. An LTV covenant is a common financial covenant that requires the outstanding principal of a loan, expressed as a percentage of the value of the security charged in favour of a lender, to stay below a specified threshold for the life of the loan. This gives lenders a means to monitor and protect the strength of their security over time. For borrowers, grasping and negotiating these covenants is key to achieving favourable loan terms and steering clear of the pitfalls that can arise from a breach. Although a...

A data protection impact assessment (DPIA) is exactly what it sounds like—an evaluation of how a particular project or process may affect data protection for impacted individuals. This Practice Note sets out: what a DPIA is whether DPIAs are mandatory, and if so who should carry out the assessment, and how It also covers how DPIAs relate to privacy impact assessments (PIAs) and data protection by design and default (DPbDD). Precedent: Data protection impact assessment—DPIA aligns with the UK GDPR. See also Precedent: Data protection impact assessment—DPIA—short form, based on an Information Commissioner’s Office (ICO) template. ICO guidance on DPIAs is available in two places: Data protection impact assessments and Data Protection Impact Assessments (DPIAs). What is a data protection impact assessment? A DPIA is a practical mechanism to help you: spot and reduce data protection risks in new initiatives, and uphold individuals’ reasonable expectations of privacy Typically, a DPIA is undertaken...

This Practice Note outlines the principal provisions of the National Security and Investment Act 2021 (NSIA 2021) before addressing the consequences of the Act for finance transactions. The NSIA 2021 requires, in specified circumstances, a mandatory notification to the Secretary of State ahead of acquiring control of an entity, and grants the government powers to review proposed or completed acquisitions where national security issues may arise (the call-in power). The regime’s impact should be assessed on certain finance transactions, particularly when financing a purchase or taking security over assets or shares in certain sectors—see Mandatory notification below—or where the asset or entity may present national security sensitivities. The substantive provisions of the Act commenced on 4 January 2022. Note that the call-in power has retrospective effect—see What is the call-in power? below. Also note that the NSIA 2021 extends to, and applies across, the whole of the UK. The National Security and Investment Act 2021—what does it do? This section provides a summary of the National Security and...

[ Printed on borrower letterheaded paper ] [ insert date ] To: [ insert name of lender ] (the Lender) From: [ insert name of borrower ] (the Borrower) Facility agreement between the Borrower and the Lender dated [ insert date ] (the Facility Agreement) Terms and references in the Facility Agreement have the same meaning. We request [ the OR a ] Loan under the Facility Agreement as follows: Amount of Loan: £[ insert amount ] Drawdown Date: [ insert date ] Purpose of Loan: [ insert purpose of loan ] Pay the Loan into: Bank: [ insert name of bank ] Account name: [ insert name of account ] Account number: [ insert account number ] Sort code: [ insert sort code ] We confirm that on the notice date and the Drawdown Date: no Event of Default or Potential Event of...

Notice of Failure to Pay [ Insert Lead-in Language ] Pursuant to Section 2(a)(i) of the Agreement, you were obliged to provide, on [ insert settlement date ] [ a payment in the amount of [ insert currency and amount ] OR the [ delivery of [ insert description of assets to be delivered ] ] ] ...

Warning to the GUARANTOR: Before you sign this guarantee, you should obtain independent legal advice about the nature of the commitments you are assuming, which will become legally binding on you upon execution of this guarantee, and your potential liabilities both now and in the future. You may take guidance from an independent solicitor. That solicitor should confirm in writing in detail that they have outlined to you the scope and limits of the obligations you are being asked to accept, together with the effect of the documents you are being invited to sign. If you choose not to obtain independent legal advice before signing the guarantee, please complete the declaration [ Supplied to you OR Enclosed ] confirming that you had the chance to seek independent legal advice, were urged to do so, yet elected not to obtain independent legal advice. The principal sum you are asked to guarantee is a defined amount. However, the interest, costs, and expenses are presently unspecified. The interest is set by a...