Further action clauses

The guidance note on further action clauses provides a detailed overview of this essential boilerplate clause often found in commercial agreements. It explores the purpose, drafting nuances, and strategic applications of further action clauses across diverse transactions. Practitioners must understand how these clauses ensure parties complete all necessary steps to give agreements full legal effect, especially in complex deals involving assignments, novations, and financial securities.

Topics Covered

• Purpose of this boilerplate clause
• Key drafting considerations for this boilerplate clause
• Possible approaches
• Reasonable endeavours clauses
• Assignment and novation clauses

Essential Insights

• Identify when a further action clause complements rather than replaces specific contractual obligations.
• Assess how scope and party responsibilities affect enforceability and unintended legal consequences.
• Consider cost allocation and reimbursement terms to manage financial risks linked to further actions.
• Evaluate the impact of “reasonableness” qualifications on the certainty of parties’ obligations.
• Explore the strategic use of powers of attorney to facilitate execution of actions beyond a party’s direct control.
• Distinguish between one-way and mutual clause approaches to tailor liability and cooperation requirements.