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.