“Definitive Agreement”

[Updated 11:30 a.m. EDT, May 6: Getting rid of “definitive transaction” in the language I offered in the previous post caused me to get carried away, and Chris’s comment below has caused me to reverse course. A letter of intent that contains binding confidentiality provisions but is otherwise not binding could conceivably be described as “providing for” a transaction. I can’t offhand think of any better way to address that potential confusion than by using “definitive agreement.” Thanks, Chris.]

I’ll now state more generally something that came to me when writing this comment to my immediately preceding post: the phrase definitive agreement is pointless. The only question is whether a written agreement provides for the transaction in question.

Consider these examples:

If: … (iii) within 12 months after the date of any such termination, an Acquisition Transaction is consummated or a definitive agreement providing for an Acquisition Transaction is executed [read the Company and the Parent enter into a written agreement providing for an Acquisition Transaction] …

… then Granite shall pay to FNB a termination fee of $450,000 (the ” Termination Fee “) (A) in the case of clause (i) above, one Business Day after the earlier of execution of a definitive agreement with respect to [read entry into a written agreement providing for], and consummation of, any Acquisition Proposal referred to in sub-clause (i)(z) above …

But I’m prepared to have someone correct me.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.