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Exclusivity in contract negotiations

This Practice Note considers exclusivity in the context of contract negotiations. It examines negotiations and agreements to agree, exclusivity or lock-out agreements, the duty to negotiate in good faith, options, rights of first refusal or pre-emption, and break fees.For a template exclusivity agreement, see Precedent: Exclusivity agreement—commercial contracts.Negotiations and agreements to agreeNegotiations between parties to agree and conclude a deal can be long-winded, difficult and with many changes to terms. There is often a significant investment of time and cost, including legal and accounting fees, that may prove to be wasted if the parties are unable to agree and finalise the deal.Conditions can change due to external factors, and the results of investigations may change the value of the subject of the deal as well as the negotiating positions of the parties. Where parties are considering a collaboration or joint venture project or a joint tender situation, there may be a period of due diligence where the parties explore how they may work together and agree roles and responsibilities. This...

Good faith in commercial agreements

This Practice Note considers good faith in commercial agreements. It examines the concept of good faith and the extent to which it is applied in commercial agreements either as an express term or an implied term and in the context of relational contracts. It also considers agreements to negotiate in good faith, the approach to the duty of good faith in other jurisdictions, the application of Braganza duties in commercial agreements, and provides some drafting considerations in respect of good faith provisions.The traditional approach adopted by English courts has been to avoid implying a duty of good faith into commercial agreements and ‘if parties wish to impose a duty [of good faith] they must do so expressly’ (Mid Essex Hospital Services). However, the courts may be prepared to imply a duty of good faith in some instances, either by applying a conventional approach to the implication of terms or, as appears from the decisions in Yam Seng Pte Limited v International Trade Corporation and Bates v Post Office Ltd, in...

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Exclusivity agreement—property

Exclusivity agreement—property Date [date] Parties 1 [name of Seller] [of OR incorporated in England and Wales with company registration number [number] whose registered office is at] [address] (Seller); 2 [name of Buyer] [of OR incorporated in England and Wales with company registration number [number] whose registered office is at] [address] (Buyer). 1 Definitions In this Agreement, the following definitions apply: Buyer's Solicitors • [name] of [address] (reference [details]); Documents • the documents relating to the Property listed in the Schedule; Exclusivity Fee • £[amount]; Heads of Terms • the principal terms annexed to this Agreement at the Appendix; Legislation • all legislation having effect in the United Kingdom at any time during the term of this Agreement, including: (a) Acts of Parliament; (b) orders, regulations, consents, licences, notices and bye laws made or granted: (i) under any Act of Parliament; (ii) by a local authority or by a court of competent jurisdiction; (c) any approved codes of practice issued by a statutory body; Lockout Period •...