Third Party Approval and Due Diligence Clauses

Due diligence clause is no "Get Out of Jail Free" card

Though often thought to be iron-clad, the recent Court of Appeal decision in Arcadia Homes Ltd v More To This Life Ltd highlighted a number of issues surrounding these types of clauses, including:

  • the important distinction between a condition precedent and a condition subsequent;
  • the effect of a correctly drafted due diligence clause; and
  • whether a third party approval or due diligence clause creates a subjective or objective test. 

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