Material Adverse Change Clauses Under Italian Law

In Italy, material adverse change (MAC) clauses are commonly used in many corporate transactions including, without limitation, merger and sale agreements, initial public offering documents, finance agreements and general contractual agreements. Despite the frequency with which such provisions are implemented, MAC clauses as such are not statutorily regulated under Italian law. Nor has Italian local case law specifically dealt with their enforcement.

In order to understand the use and enforceability of MAC clauses in Italy, it is necessary to analyze them under general principles of Italian contract law.

Freedom To Contract

Article 1322 of the Italian Civil Code sets forth the general principle of freedom to contract under Italian law. Accordingly, MAC clauses as a general matter should be valid and enforceable under Italian law. However, the applicable Italian legal principles and standards used