Conditions Precedent In Finance Agreements

Simply Finance is a series of newsletters that we hope can contribute to increased understanding of financing law and to demystify financing documents. Our aim is to explain concepts, terms and expressions in a simple way so that anyone can understand them.

Conditions Precedent in Finance Agreements

What is it? 

Conditions precedent are requirements for certain milestones of a financing to occur, like signing of the finance agreement, and disbursement of the loan. Conditions precedents will have to be evidenced by the borrower typically by submitting the required deliverables, like copies of certain agreements, permits, financial statements, corporate resolutions, insurance policies, etc. Conditions may also relate to events to be evidenced post disbursement. Such conditions are often referred to as conditions subsequent.