‘Dodgy’ documents — managing deal risk and contractual exposure

  • A seller, at the start of a transaction, should ensure that all documents impacting the resources project are clear and up-to-date, this will make the process more cost- and time-effective for all parties involved.
  • Buyers need to do their due diligence, including gathering, understanding and evaluating project documents.
  • All parties should work together to find solutions to identified problems, including rectifying ‘dodgy’ documents and allocating post-completion risks between the seller and the buyer.

Detective looking through magnifying glass

For buyers and sellers alike, there is nothing more frustrating than the wasted time, cost and effort of a transaction which does not proceed because a party fails to manage their exposure under existing contractual arrangements. For this reason, it is essential that both parties comprehensively understand the assets and commitments the subject of a proposed transaction, so as to avoid missing contract red flags or misunderstanding an existing contractual framework.

In this article, we look at the key considerations for both sellers and buyers:

  • so as to avoid transactions falling over because a project or asset is governed or affected by ‘dodgy’ documents or contractual arrangements
  • to manage risk under existing ‘dodgy’ documents whether by, in the case of the seller, achieving a clean exit or, in the case of the buyer, ensuring only known liabilities are assumed on completion of the acquisition.

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