Privity of contract in drafting
- By : Wong Mei Ying
- Category : Drafting, Linkedin Post
When drafting an agreement, obligation should not be imposed on anyone who is not a party to the agreement.
For example, in a share sale and purchase agreement, obligation should not be imposed on a company secretary (who is not a party to the SPA) to provide directors’ resolution of a company.
This is because the company secretary is not contractually bound under the SPA.
The parties to the SPA would not have recourse under the SPA against the company secretary if the obligation is not fulfilled.
Instead of: “The company secretary of the Company shall provide a certified true copy of the directors’ resolution of the Company…”
the drafting should be something along this line:
“The Seller shall procure the company secretary of the Company to provide a certified true copy of the directors’ resolution of the Company…”
This post was first posted on Linkedin on 11 October 2021.
