A Credit Facility & Revolving Line Agreement defines the terms for ongoing credit access between borrower and lender. This playbook reviews financial covenants, interest structures, and default remedies.
Why This Matters: Inappropriate choice of law or forum can lead to unenforceable judgments and excessive legal costs. A favorable jurisdiction ensures predictability and enforcement.
Negotiation strategy
If you're the Lender:
Advocate for a jurisdiction with established legal precedents, such as New York, to ensure predictability and enforceability. Consider arbitration as a primary dispute resolution mechanism to minimize costs.
If you're the Borrower:
Negotiate for a neutral jurisdiction that balances both parties' interests. Ensure that the dispute resolution process is efficient and cost-effective, possibly through specialized courts.
Essential elements
1
Governing Law Clause
Specifies applicable legal jurisdiction.
2
Dispute Resolution
Mechanism for resolving disagreements.
3
Arbitration Language
Details arbitration process specifics.
Action framework
ACCEPT
Propose edits if the jurisdiction is not neutral or lacks established precedents.
EDIT
Reject clauses that specify jurisdictions with unfavorable legal precedents.
ADD
Add arbitration clauses if not present to ensure efficient dispute resolution.
PRO TIP
Always verify that the chosen jurisdiction has a robust legal framework and established precedents to avoid future complications.
Example clauses
FAVORABLE
Preferred New York Governing Law
"This Agreement shall be governed by and construed in accordance with the laws of New York, without regard to its conflict of laws principles."
NEUTRAL
Neutral Common Law Jurisdiction
"The parties agree to select [Selected Jurisdiction], a neutral common law jurisdiction with established legal precedents, as the governing law and jurisdiction for this Agreement."
UNFAVORABLE
Unfavorable Texas Law
"This Agreement shall be governed by the laws of Texas, which may present enforceability challenges."
Fallbacks
Cross-Border Transactions
In cross-border deals, select a jurisdiction recognized internationally to ensure enforceability across borders.
High-Value Contracts
For high-value agreements, prioritize jurisdictions with efficient legal systems to handle complex disputes.
Technology Agreements
In tech contracts, consider jurisdictions with strong IP protection laws to safeguard innovations.
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DocJuris is not a law firm or a substitute for an attorney or law firm. We cannot provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defenses, options,selection of forms or strategies.