Legal Opinion on a Contract
MPS legislation has been enacted in all common law countries in Canada to replace almost all other legislation dealing with the assumption of security in personal property. PPSA has a wide application and allows the creation of many types of security rights. Three main elements must be considered in order to provide an opinion on security rights, namely: A legal opinion is often one of the closing conditions for the risk financing of a U.S. company, particularly incorporated in Delaware. The founders of these companies will often ask us, «What is legal advice?» and «Why do investors need it?» Below are brief answers to these and other frequently asked questions about legal advice. Because a security right in investment property made effective against third parties by registration is subordinated to a security right made effective against third parties by control, a secured party generally requires legal counsel of the debtor to give notice to the secured party that the security right has been made effective against third parties by both control and registration, and that it is «customary to seek notice and make an opinion that, with control, guarantee The party takes precedence over all other security interests of the Company over investment companies in the same investment property, despite the scarcity of priority valuations for other forms of guarantee. While the opinion is given for the good of the investors, there may also be benefits to the company. The assessment process may reveal historical deficiencies in important business formalities that are in the company`s interest to remedy. In addition, the fact that the company has provided legal advice in previous transactions can not only reassure current investors, but also facilitate the future financing process. Indeed, if a company is invited to obtain legal advice in a subsequent financing round, the relief work that the lawyer must carry out should generally only cover the period that has elapsed since the last legal opinion was prepared by the same law firm. In general, there will be a list of assumptions on which the preparation of the opinion is based. All assumptions and aspects on which they are based must be indicated in the opinion. Of course, assumptions should only be made in respect of facts that the lawyer knows or has reason to believe are accurate.
To some extent, the use of assumptions stems from cost considerations – a client will often have considerable knowledge of the facts of the case in question, but will not want to pay for the service required to verify those facts. A legal opinion is an official letter from your company`s management consultant to investors that contains the advisor`s conclusions on various legal issues relevant to the company and the transaction, based on the consultant`s review of a defined body of documents and information. A fairly recent study by the ABA`s Business Law Section on private mergers and acquisitions in Canada shows a sharp decline in the number of legal opinions on such transactions. The study, which covered 64 transactions ranging from $5 million to $100 million from January 2010 to December 2011, showed that the percentage of transactions requiring legal advice from the target company`s lawyers increased from 72% in 2008 to 55% in 2011. The decline in the comparable study for U.S. transactions was even more pronounced, from 58% in 2009 to 27% in 2011. Property assessments generally involve both ownership of the land and the registration of a particular charge (for example, a mortgage) on the title. In terms of headlines, opinions can certainly be based on proper research. A legal opinion informs the addressee of the legal effect of the conclusion of the proposed transaction. For example, in the context of a cross-border transaction, lawyers in a foreign jurisdiction may advise on the validity, applicability and compliance of a settlement document with the local law of that jurisdiction (e.g.
local registration or stamp duty requirements). A legal opinion typically includes the following: A legal opinion identifies the legal risks and issues that the recipient should address as part of the transaction. For example, a notice may identify certain documents that have not been properly applied and are therefore unenforceable. The beneficiary may use the points mentioned in the notice to carry out further investigations and, depending on the results of these investigations, decide whether other forms of protection (e.g. guarantees and compensation) are necessary. The reason for this decline is that commonly expressed points, such as the existence and status of the target company at closing, proper approval and delivery of transaction documents and the like, are issues that can often be fulfilled through due diligence. As due diligence becomes more robust and electronic search becomes more efficient, the need to rely on legal advice decreases. Legal advice is usually prepared and renewed immediately prior to the transaction or performance of the contract to ensure that the document has been prepared in accordance with applicable laws and legal practices. Sometimes it is used for litigation, i.e. for the competent preparation of a legal dispute and a constant strategy of conduct before the courts as an additional argument or legal analysis of evidence.
When preparing a legal opinion, lawyers are responsible for it, as they conduct legal and factual research, analysis, and reviews. Legal advice may include, for example, the valid existence of the Company, the valid issuance of shares to investors under applicable corporate law, compliance with certain laws relating to the transaction, the applicability of transaction agreements and, in some cases, the existing capitalization of the Company. Legal opinions do not express opinions on all aspects of the company and its operations, but focus on a specific range of corporate and securities elements. The level of due diligence required to prepare a legal opinion is often the same, regardless of the size of the transaction. If the amount of the transaction does not warrant an expensive notice, the attorney may contact the opposing attorney to discuss whether certain issues such as proper authorization, execution, and delivery of documentation can be accepted to reduce costs for the client. Another cost to the company is the time spent – not only in terms of lawyers` hourly rates, but also the fact that preparation, diligence and (in some cases) negotiations related to legal advice contribute to the process of closing the deal. This can be a challenge for companies that need to close a deal on a very tight schedule. Is the legal opinion worth it? While cost-benefit analysis varies from company to company, there are a few basic principles to keep in mind. This article contains only general information on legal issues and developments and is not intended to be specific legal advice. For more information, please see our disclaimer. All opinions relating to securities are subject to numerous restrictions, including the following: Sometimes it is not possible for the person seeking expert advice to adequately inform counsel of the importance of the matter or to provide full access to the required information for reasons of confidentiality.
In these circumstances, the expert opinion may contain language limiting the lawyer`s liability. Such an opinion is called a qualified opinion. If the reservations applied to all the opinions expressed, it was acceptable to state the opinions and then list the reservations in a list or in subsequent paragraphs. When preparing an expert opinion, the lawyer must take into account who can rely on the expertise. Since the Hedley Byrne case, it has been clear that anyone whose opinion writer knew or ought to have known that he or she would rely on the expert opinion can bring an action against the lawyer if the report was written negligently. The lawyer should therefore insert a restriction that the notice is made available to addressees for their sole use and cannot be made available to another person by them and that no other person can rely on the notice. It is also important to recognize the risk of liability that a lawyer accepts when giving legal advice. This risk is not limited to financial problems, but can also affect the lawyer`s reputation. With this in mind, follow the «golden rule» when seeking legal advice from an opposing lawyer – don`t ask for the inclusion of a particular opinion that you wouldn`t provide yourself in similar circumstances.