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Drafting Market-Based MAC and Termination Fee Clauses
Falling real estate prices, increased consumer defaults, and relaxed underwriting have all contributed to the U.S. housing crisis that has disrupted financial markets. With a recession on the horizon, higher-risk debt financing is now subject to greater scrutiny as is evident by equity sponsors and financing sources reconsidering prior commitments, and ratings agencies reevaluating and lowering their ratings on riskier loan portfolios. As such, the cost of the financing has become significantly more expensive and, in some cases, no longer available. This situation has caused various equity sponsors and financing sources to re-examine their obligations to consummate a distressed commitment, and their ability to back out of a deal.
Two types of contract clauses are commonly cited when a buyer or financing source desires not to make good on its commitment. These clauses are material adverse change (MAC) clauses and termination fee clauses. Several recent cases show that good draftsmanship and a clear understanding of their intended effect are essential in heading off disputes when implementing these provisions.
MAC Clauses
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Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
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Legal Possession: What Does It Mean?
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The Anti-Assignment Override Provisions
UCC Sections 9406(d) and 9408(a) are one of the most powerful, yet least understood, sections of the Uniform Commercial Code. On their face, they appear to override anti-assignment provisions in agreements that would limit the grant of a security interest. But do these sections really work?