Jurisdiction(s):
United Kingdom

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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...

Contractual options to renew leases: drafting, conditions precedent, time limits, perpetuities, SDLT/LTT, LTA 1954 and registration (England and Wales)

Published by a LexisNexis Property expert

Practice notes

A contractual option to take a lease for a further term is a ‘call’ option

It gives the tenant a one-sided entitlement to demand a renewal lease. The tenant is not compelled to use it, yet upon exercise the landlord must honour the bargain. The ability to seek a renewal lease is commonly conditional on satisfaction of conditions precedent (for example, all rent paid and other tenant covenants observed) – for further discussion see Conditions precedent below. A call option is a contract for the sale of an interest in land within the Law of Property (Miscellaneous Provisions) Act 1989, s 2(1).

The option must:

be in writing
contain or incorporate all of the terms expressly agreed between the parties
be signed by or on behalf of each party

When the tenant exercises the option by giving notice to the landlord, that act is simply a unilateral trigger for the obligation to grant the lease. Accordingly, a valid exercise of the option does not require both parties to sign the notice...

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Web page updated on 26/05/2026

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