Corporate & Securities Law

When a Party Has a Limited Role in a Transaction

By Ken Adams

Special thanks to reader Tony for reminding me of a usage that had slipped my mind: becoming party to a contract with respect to only certain provisions.

For example, in an acquisition, the buyer?s parent might be party to the acquisition agreement solely to guarantee the buyer?s obligations or solely to undertake to pay a termination fee in certain circumstances.

It?s appropriate to reflect a party?s limited role by stating in the introductory clause, before the party?s name, between offsetting commas, solely with respect to [specified provisions]. It?s best for a party with a limited role to come last in the introductory clause.

And you’d add that phrase to that party’s signature block, too. The phrase, followed by a colon, could go above the party?s name in the signature block, or, preceded by a comma, it could go immediately below the party?s name. The latter approach is slightly more economical.

Any thoughts?

Full post as published by AdamsDrafting on March 25, 2008 (boomark / email).