Be careful with the word “notwithstanding”

Drafting
Drafting

Be careful when using the word “notwithstanding” in an agreement.

Say you are preparing a supplemental agreement to substitute a clause. The substitution clause set out the rights of holders of a class of shares. You double check and triple check the substitution clause to ensure it contains all the rights you want to include.

But guess what? Buried somewhere in the main agreement is a clause that says “Notwithstanding anything to the contrary in this agreement… ” followed by something that is inconsistent with what you have just drafted.

When drafting an agreement, be careful with clauses that contain the word “notwithstanding”. A clause with that word is meant to take precedence over other clauses.

You may have just drafted an agreement which give corporate lawyers headache during legal due diligence.

#malaysiancorporatelawyer
#contractdrafting

First posted on Linkedin on 17 November 2021.

Linkedin Post
Partial Share Sales in Malaysia: What Sellers Need to Know About Guarantees

In partial disposals, it’s common for sellers and buyers to agree that any existing guarantees given by the sellers to secure banking facilities of the target companies will be adjusted to reflect the post-completion shareholding. For public listed companies (PLCs) in Malaysia, this can affect the deal timeline if not …

Linkedin Post
M&A Break Fees: Practical Constraints in Malaysia

In M&A transactions, break fees refer to a pre-agreed sum payable if a party withdraws from a proposed transaction without any breach by the counterparty. In principle, break fees are intended to deter frivolous exits and to compensate the other party for transaction-related costs, including due diligence and advisory expenses. …

Linkedin Post
M&A Disclosure Letter: DIY or Get a Lawyer?

In M&A transactions, a disclosure letter sets out the exceptions and qualifications to the representations and warranties (R&Ws) given by a seller in a share sale and purchase agreement (SPA). Getting it wrong can turn an unintentional misstatement into a breach of contract, with serious legal and financial consequences. Should …