| Commentary

207 ‘Lock-out’ provisions

| Commentary

207 ‘Lock-out’ provisions

In return for agreeing to a confidentiality undertaking, a potential buyer may insist upon the seller entering into a ‘lock-out’ provision in his favour, under which the seller agrees not to enter into any negotiations with a third party during the defined period. This provision accordingly gives the buyer exclusivity for a specific period of time in order to carry out investigations and conduct negotiations with the seller. The provision must be drafted in the negative, because if it positively binds the seller to negotiate with the buyer it will be a ‘lock-in’ agreement and so unenforceable,

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