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Key definition

Conditions precedent definition

What does Conditions precedent mean? Conditions precedent are contractual requirements that must be satisfied or waived before a contract becomes effective or a party may exercise a right, such as drawing under a loan. They are a descriptive concept recognised in case law on contract formation, rather than defined by statute, and are used across financing transactions. In leveraged finance, CPs are commonly grouped into CPs to signing/effectiveness and CPs to closing/utilisation. CPs to signing are items to be met by the borrower before the facility agreement takes effect (for example, authorisations and certain regulatory consents). CPs to closing are those that must be...

Acquisition finance conditions precedent: lenders’ document and responsibility checklist for CPs at signing and first utilisation

Published by a LexisNexis Banking & Finance expert

Practice notes

conditions precedent typically requested by senior lenders

The table below sets out the usual conditions precedent sought by senior lenders in an acquisition finance deal, indicating who drafts/provides each item and any other pertinent points

There is typically a substantial suite of conditions precedent papers, including:

corporate authorisations
acquisition documents
equity investment papers
finance papers (including facility agreements and security documents)
legal opinions
due diligence reports and other material
documents on the structure and flow of funds

These conditions precedent appear in a schedule to the facilities agreement. Some must be delivered before signing and others before first utilisation (see Practice Note: Conditions precedent on acquisition finance transactions—general considerations)

Consider what additional conditions precedent are suitable for the particular deal, having regard to due diligence findings, any specific legal issues and the transaction’s structure. Lists in precedent or standard form documents should serve only as starting points. For an introductory overview, see Practice Note: Introductory guide to acquisition finance, and for definitions of common terms, see Glossary of acquisition finance terms and jargon...

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Web page updated on 21/05/2026

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