Legal Opinions Flashcards
What is a Legal Opinion (LO)?
An address of various legal issues relating to a transaction and its parties, given from a lawyer to an interested party.
P. 415.
An interested party may be a Lender, Arranger, Agent Bank, Borrower, Credit Rating Agency, Trustee, etc. Subsequent parties, though, will usually be explicity warned against relying on an LO, typically in the document itself through the form of a disclaimer, unless it is understood that a facility will, say, be syndicated quickly after execution.
What is the Commercial Purpose of a Legal Opinion?
To give the Lender assurance that the transaction:
* Is valid.
* Gives rise to enforceable rights and obligations; and if relevant,
* Has properly arranged the transfer of assets or creation of security.
P. 415.
What are the Limiations of Legal Opinions?
- They are opinions, not guarantees, and therefore heavily qualified and fallible.
- They only address legal, not commercial, financial, or economic matters.
- They do not account for changes to the law.
- They are predicated upon assumptions, which arise from the documentation.
- The lawyer’s expertise will be limited in certain respects, like foreign law.
P. 415-417.
In light of the final point, Lenders should obtain LOs from all jurisdictions relevant to a transaction.
In a standard International Loan, what would a Legal Opinion aimed specifically at the Borrower address?
Legal issues regarding the Borrower’s:
* Ability to undertake and perform its obligations under the laws of its home jurisdiction.°
* Compliance with all internal and external procedures necessary to enter into the transaction.
Legal issues regarding the Borrower’s Jurisdiction’s recognition of:
* The transaction’s choice of law.
* The effectiveness of the Lender’s security in insolvency.
* The Lender’s right to transact without need for licensing or registration.
P. 420-421.
° This relates to the Borrower’s incorporation, continued existence, legal status, solvency, participation in legal proceedings, and its ability to carry on its business, own assets, enter into the transaction, give security, and be served suit. The transaction’s legality and compliance with tax law should also be affirmed.
This Opinion should be given by a lawyer from this jurisdiction.
In a standard International Loan, what would a Legal Opinion aimed specifically at the Security address, assuming the lex situs differs from the Borrower’s home jurisdcition?
Under the lex situs, legal issues regarding the Borrower’s:
* Title and right to possess or occupy the security.
* Recognition as a legal entity and entitlement to operate, own property, and give security.
* Proper licensing and registration, if necessary.
* Ability to be served suit under English law.
Under the lex situs, legal issues regarding the Security’s:
* Proper execution.
* Enforceability in insolvency.
* Current validity and priority.
P. 421-422.
Issues regarding tax and legality should also be addressed.
This Opinion should be given by a lawyer from this jurisdiction.
In a standard International Loan, what would a Legal Opinion aimed specifically at the Facility Agreement address?
- The Agreement’s validity, legality, bindingness, enforceability, and tax position under the chosen jurisdiction.
- The validity of the choice of jurisdiction.
- The Agreement’s proper execution.
- The Borrower’s ability to be served suit under the chosen jurisdiction.
P. 423-424.
This Opinion is usually, but not necessarily, given by the same lawyers who advised the Lender during negotiations.
What is the Generic Structure of a Legal Opinion?
- Preliminary Matters: Essential context is provided.
- Assumptions: The assumptions upon which the Opinion rests are stated and explained.
- The Opinion: The legal analysis is provided.
- Qualifications: The Opinion’s limitations are identified and qualified.
P. 427-429.
For an English Lawyer, what is the Consequence of providing Incorrect Advice in a Legal Opinion?
A suit in either contract or tort for professional negligence.
P. 430.
The regular rigamarole of proving a claim of negligence would then ensue. Under the Assumption of Responsibility Test for negligence, under the correct circumstances, it is possible that he will be held liable for the failure of a foreign lawyer.
For an English Lawyer, what is the Consequence of providing Incorrect Advice in a Legal Opinion?
A suit in either contract (Rome I) or tort (Rome II) for professional negligence.
P. 431.
What is the Effect of the Rome I & II Conventions?
If it is not pre-determined by contract, the parties may agree among themselves the dispute’s governing law.
Barring agreement, a determination is made according to, in ascending priority:
1. Wherever the damage occured.
2. Wherever the parties’ habitual residences were when the damage occured.
3. Wherever the damage is evidently and manifestly most closely connected.
P. 433.
