Capacity and Material adverse effect: Difference between pages

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imported>Doug Williamson
(Amend Law definition, in relation to dual signatories.)
 
imported>Doug Williamson
m (Link with Adverse event page.)
 
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1. ''Law''.  
(MAE).  


If a company or individual lacking contractual capacity purports to enter a contract, the contract may not be enforceable.  
A clause in a loan agreement.


Problems of contractual capacity may arise in relation to requirements for dual signatories to bind certain foreign companies, minors, mental incapacity or intoxication.
It is intended as a 'catch-all' clause and states that if there is a change in the circumstances of the borrower that materially and adversely affects the borrower's ability to repay, then this will constitute an event of default.
 
 
2. ''Banking''.
 
In relation to the individuals whom a bank will authorise to open and operate a bank account, the appropriate level of seniority and the role of the individuals within the business of the customer.
 
 
3.
 
More generally, the ability to absorb or hold.  For example, tax capacity or borrowing capacity.
 
(Tax capacity being the ability to use tax reliefs efficiently to shelter otherwise taxable profits or gains. Borrowing capacity being the maximum amount of borrowing which can be sustained based on a firm's expected future cashflows and its assets.)




== See also ==
== See also ==
* [[Contract]]
* [[Event of default]]
* [[Minor]]
* [[Loan agreement]]
* [[Material adverse change]]
* [[Adverse event]]


[[Category:Long_term_funding]]
[[Category:Bank_Lending]]
[[Category:Compliance_and_audit]]
[[Category:Debt_Capital_Markets]]
[[Category:Legal_Documentation]]

Revision as of 07:35, 5 July 2014

(MAE).

A clause in a loan agreement.

It is intended as a 'catch-all' clause and states that if there is a change in the circumstances of the borrower that materially and adversely affects the borrower's ability to repay, then this will constitute an event of default.


See also