Legal Practice Notes

When security is properly created, it binds the security provider and the secured party as between themselves. However, that security will not, as a general rule, bind third parties, such as a liquidator or an administrator of the security provider. In many situations, extra steps are needed to ‘perfect’ the security in question. Perfection is the method by which the security becomes enforceable against certain third parties (though not necessarily every third party). For details on third parties who may not be bound even after perfection, see: The difference between perfection and priority below......

Definitions The terms and conditions ( T& Cs) for the notes (the Notes) appear within the Prospectus and, for every form of securitisation, also as a Schedule to the Trust Deed itself. This Practice Note outlines what is set out in those T& Cs. Usually, the T& Cs relate to the Notes solely in global form and indicate that, in certain narrow situations, definitive Notes might on occasion be issued. In those instances, the T& Cs will be revised as required. This method removes the need to address definitive Notes, Coupons and Talons within the T& Cs, the Trust Deed or the Master Definitions Schedule across the documentation suite. Previously, aspects of the T& Cs were shaped on the assumption that Noteholders would trade definitive Notes bearing the T& Cs on the reverse, and a potential purchaser needed clarity in full about exactly what was being...

This Practice Note examines how sale and leaseback arrangements are structured, the reasons for adopting them, and the principal points to negotiate in the leaseback documentation... What is a sale and leaseback? A sale and leaseback enables a real estate owner to release capital whilst retaining occupation and use of the property. the disposal by a business of part or all of its property interests in exchange for a cash lump sum; and the concurrent grant back to that business of leases of those properties it still needs to run its operations Sale and leaseback is also commonly used to place property into a self‑invested personal pension or a small self‑administered scheme, which falls outside the scope of this note. See Practice Note: Buying property from a SIPP or SSAS. Certain Islamic finance structures operate in a closely comparable manner to sale and...

Many of the usual events of default for a typical syndicated loan facility will likewise apply, in some form, to a real estate finance transaction. For information about those events of default, including what events of default are and why they are used, see Practice Note: Events of default. This Practice Note considers the kinds of additional events of default commonly seen in real estate finance investment and development transactions. Purpose of events of default Instead of relying on general contract law for a remedy where the borrower breaches the loan agreement, most facility agreements incorporate a mechanism by which a lender may, if it chooses, take action when the borrower breaches the loan agreement or when certain other events occur. The events that permit the lender to act are usually set out expressly in the facility agreement and are referred to as 'events of...

Collateral warranties sit at the heart of the suite of development documents in real estate development facilities. They are usually issued by the project team (e.g. the building contractor, architect, engineers and other consultants, and key sub-contractors to the building contractor) in favour of both lender and borrower. A lender commonly takes security over the borrower’s rights under key development contracts, including any collateral warranties given to the borrower, alongside taking collateral warranties addressed directly to the lender. This Practice Note concentrates on the collateral warranties delivered to the borrower and the ways a lender can secure the borrower’s rights under them. It explains: what a collateral warranty is which collateral warranties the lender should take security over methods for taking security over the borrower’s rights under collateral warranties: assignment by way of security, or charge how to address...

This Practice Note considers the principal participants in real estate finance where property is being developed. It does not address the lender or other finance parties (see Practice Note: The finance parties) Borrower The borrower will commonly be acquiring the site for development, or may already own it. In construction documentation, the borrower is typically identified as the employer, client or developer SPV or trading entity? In real estate finance, the borrower is often a special purpose vehicle ( SPV), also referred to as a special purpose company ( SPC). The borrower entity is created or bought ‘off the shelf’ solely for the proposed deal (ie acquiring, holding, developing and operating the property). Where an SPV is used, the borrower’s activities—and therefore its assets and liabilities—are confined to matters linked to that transaction......

Introduction Purpose of this Practice Note This Practice Note maps the principal environmental, social and governance ( ESG) considerations influencing project finance transactions. It explores how lenders and sponsors weave ESG standards into due diligence, contractual suites, and oversight after financial close. It also reviews the tightening interplay between soft-law norms and binding regulation, as project finance—once anchored chiefly in financial covenants and risk allocation—now finds its identity equally in its ESG profile. This shift unfolds amid intensifying regulatory focus, investor behaviour and public scrutiny. The aim is to equip practitioners with a clear analytical framework for navigating this evolving discipline. Relevance of ESG in Project Finance ESG considerations have grown in prominence in project finance because they shape investment choices, risk management and long-term business sustainability. Investors and financiers apply ESG criteria to assess corporate conduct, anticipate future financial performance, and manage risks, notably around climate...

Step-by-step guide Party A and Party B execute an International Swaps and Derivatives Association ( ISDA) Master Agreement, together with a Schedule, and agree with one another that they will document their zero‑coupon inflation swap ( ZC) by means of an ISDA confirmation Presume a notional amount of......

Scope of this Practice Note This Practice Note sets out the core ideas behind Web 3.0, digital assets and cryptoassets. Regulators, tax authorities and commentators use a variety of labels—cryptoassets, digital currencies, virtual currencies, cryptocurrencies, and crypto/digital tokens—and it is often uncertain whether these are used as interchangeable terms or with distinct meanings. For the purposes of this Practice Note, ‘cryptoasset’ is adopted as a broad term covering cryptocurrencies, virtual currencies, virtual assets and digital tokens. As outlined in the section What are digital assets and cryptoassets? below, although all cryptocurrencies are cryptoassets and all cryptoassets are digital assets, some digital assets are not cryptoassets, and some cryptoassets are not cryptocurrencies. This Practice Note primarily concentrates on ‘cryptoassets’ rather than the wider category of ‘digital assets’, because targeted regulatory measures in the digital arena have, so far, largely focused on...

What does this Practice Note cover? This Practice Note sets out what weather derivatives are, their aims and uses, and the regulatory framework that applies to them. For guidance on sustainability and environmental, social and governance ( ESG) derivatives more generally, see Practice Note: ESG derivatives. It also covers typical purposes, applications, and the rules shaping use too. What are weather derivatives? The weather risk market exists to help participants manage the negative financial effects of weather via risk transfer contracts linked to meteorological variables (chiefly temperature, rain, snow, wind and sunshine). Approaches to weather-driven financial exposure usually fall into two main categories: catastrophe insurance or weather derivatives. Catastrophe insurance suits infrequent risks with potentially large consequences, such as extreme drought or flooding, whereas weather derivatives are better aligned to high frequency/low impact situations, for example an unseasonably cool August or a...

What does this Practice Note cover? This Practice Note sets out an explanation of warrants (often termed securitised derivatives) and considers: what warrants are types of warrants key warrant terminology how warrants are listed and offered how warrants are documented, and the differences between warrants and comparable instruments What are warrants? A warrant is a tradeable security that grants the holder the right, but not the obligation, to: buy or sell a specified asset (the underlying asset, or simply the underlying) at a specified price (the exercise price or strike price) on a specified date or dates (the exercise date(s)) A warrant is a type of derivative—its value is derived from the underlying asset and offers exposure to that value without owning the asset. They are sometimes described as securitised derivatives, ie derivatives embodied in...

This Practice Note This Practice Note explores warehouse financing as a strand of structured trade finance, enabling a producer or trader to raise funds against its own goods stored in a warehouse. In a standard arrangement, a lender advances a loan to a producer as borrower, and the borrower’s obligations are secured over the stored goods. If put together correctly, the structure is self-liquidating: the loan is cleared from the sale proceeds of the charged goods in the borrower’s ordinary course of trade. Alternatively, a lender provides funds to a trader, as borrower, who uses the money to buy goods from suppliers or producers and then stores those goods in a warehouse. This set-up may suit a trader that has settled with its supplier but cannot afford to store the goods received until it has accumulated enough for an...

This Practice Note addresses: the distinctions between amendments, waivers and consents the circumstances and reasons for seeking a waiver how to submit and respond to a waiver request factors for lenders when deciding how to reply to the request the risks to lenders of disregarding a default conditions that may accompany the grant of a waiver or consent how such arrangements ought to be documented What is the difference between amendments, waivers and consents? Fundamentally, any departure from the terms of a facility agreement requires an amendment, a waiver or the lenders’ consent. Both waivers and amendments call for lender approval. On a bilateral facility this is typically straightforward, but it becomes more involved on a syndicated transaction. Syndicated facility agreements based on Loan Market Association ( LMA) documentation treat variations to any finance document as either an amendment or a waiver. Separately, some facility agreements are drafted to permit...

What are carbon credits? Carbon credits are transferable units, each signifying that one tonne of CO2, or an equivalent amount of another greenhouse gas, has been avoided, reduced, or removed from the air. Credits arise from projects that either take CO2 out of the atmosphere, prevent emissions that would otherwise occur, or curb emissions below a forecast baseline. To issue credits, such projects must first obtain certification from a recognised carbon standards body (see below). What are voluntary carbon markets and how do they differ from compliance carbon markets? Carbon markets are trading mechanisms through which organisations and other entities buy and sell carbon credits, OTC or via exchanges. Purchased credits can be retired to counterbalance the buyer’s emissions, or resold on to another participant. Broadly speaking, there are two categories: compliance carbon markets and voluntary carbon markets ( VCMs). Compliance markets are created under...

This Practice Note outlines when a contract may be treated as void and the consequences that follow. It differentiates void, voidable and unenforceable agreements, and explores voidness arising from: common mistake, a unilateral mistake as to contractual terms where the other party is aware, mistaken identity, non est factum, and statutory avoidance, while also recognising illegality as a distinct category. For a tabular overview of illustrative judgments on contract law since 1 January 2020, see Practice Notes: Contract disputes—illustrative decisions (2026) Contract disputes—illustrative decisions (2024–2025) [ Archived] Contract disputes—key and illustrative decisions (2020–2023) [ Archived] When is a contract a void contract? A void contract is one with no legal effect whatsoever. A contract will be void where: the parties have contracted under a fundamental common mistake one party agrees on mistaken terms and the other party knows of that...

This Practice Note offers practical direction on correctly executing documents when one or more parties to a contract are not physically together, often referred to as virtual signing or a virtual closing. The Law Society has brought together established materials covering: execution of documents by virtual means, use of electronic signatures, its ‘ Tips on how to operate in practice’ concerning virtual execution and the use of e‑signatures, and Q& A on using electronic signatures and completing virtual executions, including ‘ Our position on the use of virtual execution and e‑signature during the coronavirus ( COVID‑19) pandemic’. We have assembled a comprehensive, interactive collection to help users identify and navigate the concepts and common issues involved in executing documents, including by virtual means. Each section or phase contains practical guidance, precedent clauses and Q& As relevant to that stage. For more...

Why are valuations necessary? Broadly, valuations for schemes of arrangement or Part 26A restructuring plans serve to contrast projections of (i) what creditors and shareholders recover within the scheme/plan against (ii) the business value and associated recoveries if no scheme/plan proceeded. The setting and method of sale can profoundly influence proceeds or value achieved on disposal. Because sale routes differ, the realised figure may vary markedly. When delivering a valuation, a valuer must adopt assumptions about how and in what circumstances an imagined sale would take place, including the route to market, timing and prevailing conditions. Accordingly, valuation exercises typically weigh the expected distributions under the proposed scheme or plan against the counterfactual position were the scheme or plan not implemented. For schemes or restructuring plans—often concerning financially stressed companies that may otherwise enter administration or...

The most common reasons for entering into derivatives are for the purposes of: Speculation — when a party seeks exposure to a given variable, for example taking a view on a commodity’s future price on the assumption it will rise or fall over a chosen period Hedging — aiming to offset exposure to the risk of an unfavourable shift in a variable, or to stabilise expected outcomes over time Arbitrage — seeking to take advantage of price discrepancies (between markets, or within the same market over time) to earn profit or cut costs, or where one participant can reach a price or market unavailable to another, including where prices differ over time Exposure to asset classes — obtaining access to a target market (eg commodities, shares, property) without incurring the expense, complexity and formalities associated with those markets, avoiding the same costs and...

What are Incoterms and what is their origin? Incoterms—short for ‘ International Commercial Terms’—are a set of globally recognised trading terms used in international, and at times domestic, contracts for buying and selling goods. They comprise 11 three‑letter abbreviations, each standing for a distinct package of provisions that apportion duties, costs and risks within a sale and purchase agreement. The International Chamber of Commerce ( ICC) publishes rules that interpret Incoterms and explain the meaning of each term. First issued in 1936, these rules are updated from time to time to mirror developments in trading practices. In September 2019, the ICC released the most recent edition, Incoterms 2020, effective from 1 January 2020 (although parties could opt to apply the 2020 rules earlier if they wished). For the complete text of the 2020 rules, see the following Practice Notes: Incoterms®...

What does this Practice Note cover? This Practice Note examines transactions that rely on Regulation S under the Securities Act of 1933, as amended (15 USC § 77a) (the Securities Act). Regulation S removes from the section 5 (15 USC § 77e) registration regime offers and sales of securities conducted outside the US. The note provides an outline of Regulation S, addressing the issuer and resale safe harbours, typical Regulation S deal structures, and practical guidance for lawyers working on . What is Regulation S? Under section 5 of the Securities Act, it is unlawful to use any means or instruments of interstate commerce to offer, sell, or deliver a security unless a registration statement for that security has been filed with, and declared effective by, the Securities and Exchange Commission ( SEC). As ‘interstate commerce’ in section 2(a)(7) of the Securities Act (15 USC §...