Key terms in project finance documentation and drafting tips — conditions precedent

In a project finance transaction, facility agreements include specific conditions that need to be satisfied before funding will occur. These conditions are known as conditions precedent, or “CPs”. There are potentially serious consequences of CPs not being satisfied, for example, the lender is not obliged to provide funding.

This guidance note explores the two types of CPs that lenders will require before funds are made available to the borrower. They are:

• • documentary CPs; and
• • factual CPs.

See Key terms in project finance documentation and drafting tips — conditions precedent.