Conditions To Closing

One term that you may hear when negotiating the sale of your business – or the purchase of a new business – is "conditions precedent" or "conditions". What does this term mean, and what are common examples?

CONDITIONS  or CONDITIONS PRECEDENT are events that have to happen before something else can happen. Quite simply, they are the conditions that must be met before the deal will close.

Common examples of these conditions are:

1. The covenants, representations and warranties of the seller will be true and correct as of the date of the agreement and the date of closing.

For example, if you sign an agreement on the 10th of January, with an anticipated closing date of the 31st of January, everything that you promised to the other party was true on the 10th must still be true on the 31st.