In a basic “further assurances” provision, the parties agree to take care of any paperwork required to complete transaction formalities that haven’t been completed by the time of the closing. The aim is primarily to prevent either party from refusing to sign a document required to transfer assets. That should be unobjectionable, but I see some problems.
First, “further assurances” provisions are generally bloated. Here’s a random example from EDGAR:
Further Assurances. At and after the Effective Time, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of SpinCo or Merger Sub, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of SpinCo or Merger Sub, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets of SpinCo acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger.
Second, you also also find “further assurances” provision in contracts that don’t provide for a closing. Through copy-and-paste cross-contamination, it might appear in, for example, a services agreement, where it serves just to say that a party, or all the parties, must do anything that a reasonable person would think it necessary to do as part of the transaction. You sometimes see an efforts standard thrown in for good measure. What kind of additional actions are contemplated? This expanded use of “further assurances” is overkill.
And third, the phrase further assurances is foppish legalistic jargon. There’s no place for assurances in contracts; my categories-of-contract-language framework doesn’t include “language of assurance.” You’d laugh if Acme said, “I assure you I’ll get you those additional documents.”
So here’s what I propose as a “further assurances” provision, although without calling it that:
Additional Documents. At the written request of the other party, each party shall provide the requesting party, or sign for the requesting party, any additional documents required to consummate the transactions contemplated by this agreement.
If you have other stuff you’d like to put in a “further assurances” provision, I suggest you call it something else.
2 thoughts on “Some Not-Entirely-Positive Thoughts on “Further Assurances””
My pass at the provision:
‘On written request, a party shall promptly sign, or provide the requesting party with, any additional documents necessary to consummate transactions under this agreement’.
I threw in the ‘promptly’; replaced ‘required’ with ‘necessary’ because the former is passive without a by-agent; and replaced ‘contemplated by this agreement’ with ‘under this agreement’ because the former is anthropomorphic, raising the image of ‘this agreement’ chin on fist, contemplating transactions.
Adding promptly is legit. And your version might prompt me to change my version to “the transactions provided for in this agreement,” or something comparable.