Further Assurances


The Further Assurances clause requires the parties to cooperate and perform all necessary actions to effectuate the intent of their agreement. The clause can be found in many different locations in an agreement. Sometimes it is included in the transaction provisions, sometimes in the covenants section and on other occasions in the miscellaneous provisions; and in some instances, it can even be found in multiple places in the same agreement with inconsistent terms.

Standard Clause

Further Assurances. The parties shall execute such further documents and do any and all such further things as may be necessary to implement and carry out the intent of this Agreement.

Clause Examples

Example 1

Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. COMMON STOCK PURCHASE AGREEMENT, September 20, 2010 (Law Firm: Cooley LLP).

Example 2

The parties shall upon reasonable request of the other, execute such documents as may be necessary or appropriate to carry out the intent of this Agreement.

Example 3

Subject to the terms of this Agreement, at and after the Closing, the Parties shall execute and deliver such documents and other instruments and take such further actions as may be reasonably necessary to carry out the provisions hereof and consummate the Merger.

Example 4

Each party hereto shall execute and cause to be delivered to each other party hereto such instruments and other documents, and shall take such other actions, as such other party may reasonably request (prior to, at or after the Closing) for the purpose of carrying out or evidencing any of the transactions contemplated by this Agreement.

Example 5

In case at any time after the Effective Time any further action is reasonably necessary to carry out the purposes of this Agreement or the transactions contemplated by this Agreement, the proper officers of the Company, Parent and the Surviving Corporation shall take any such reasonably necessary action.

Discussion

Judicial Enforcement

In general, the courts will enforce further assurances clauses. However, a broadly drafted clause may invite abuse. Darren Skinner of Arnold & Porter suggests that in such cases: "the draftsperson might consider: (i) qualifying the standard of required further assurances to that which is reasonable and necessary or desirable; (ii) providing more detail regarding the nature and categories of further action prescribed by the clause; and (iii) expressly enabling the parties to request such further assurances from each other." Boilerplate Blunders: A Reminder That "Standard" Contractual Provisions Should Be Used With Care.

Gervas W. Wall of Deeth Williams Wall LLP suggests that a Further Clauses should be used with caution. "Keep in mind that rushed deals are more likely to contain serious drafting flaws or missed steps. If you are tempted to include a "further assurances" clause to overcome serious insecurities about the coverage of the agreement itself, it is probably a good idea to spend more time in the drafting stage and to have other people assist in the textual review. Ensure that as many items as possible are agreed upon and delivered at the closing to prevent over reliance on "further assurances" which some parties will take as a carte blanche to make frivolous and costly requests." The Boilerplate: What does it Accomplish?

Note: If Further Assurances is included in an agreement, careful consideration should be taken determine whether the clause survives termination.