Market-Based MAC and Termination Fee Clauses on the Rise, But Subject to Pitfalls

Two types of contract clauses are commonly cited when a buyer or financing source desires not to make good on its commitment. These clauses are material adverse change clauses and termination fee clauses. Several recent cases show that good draftsmanship and a clear understanding of their intended effect are essential in heading off disputes when implementing these provisions.

26 minute read April 29, 2008 at 04:05 PM
By
G. Thomas Stromberg And Justin Rawlins
Market-Based MAC and Termination Fee Clauses on the Rise, But Subject to Pitfalls

Financial markets are unsettled. A result of the U.S. housing crisis has been a disruption in the general credit markets and increased scrutiny of transactions using higher risk debt financing, including leveraged buyout deals.

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