Jurisdiction(s):
United Kingdom

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...

Documentary Conditions Precedent Sign-off in Bilateral and Syndicated Loans: Roles of Lenders, Facility Agents and Lawyers; CP Satisfaction Letters and Waivers

Published by a LexisNexis Banking & Finance expert

Practice notes

All documentary Conditions precedent (CPs) to funding must be fulfilled (or expressly waived) before any drawdown can occur. For more information on the purpose and types of conditions precedent, see Practice Note:

Conditions precedent
Conditions precedent to Lending—overview

Who signs off on the documentary CPs?

Once every documentary CP has been met (or waived), the lender (or, in syndicated transactions, the Facility agent) is typically required under the facility agreement to confirm this to the borrower in writing. Whether the documentary CPs are satisfied will have been assessed by reference to a range of legal, commercial and factual matters, considered jointly by the lender(s) and the lawyers acting for the lender(s). Accordingly, sign-off on the documentary CPs involves both the lender(s) and their lawyers. It should be noted, however, that the ultimate commercial decision to lend rests with the lender(s), not their lawyers.

Role of the lawyers for the lender(s)—issuing a CP satisfaction letter

Finding a suitable precedent

In bilateral transactions, the lender’s lawyers will issue a CP satisfaction letter to the...

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Web page updated on 21/05/2026

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