Conclusive evidence clause: Difference between revisions

From The Jolly Contrarian
Jump to navigation Jump to search
Created page with "Any finance lawyer will be familiar with the following kind of clause: {{quote|In the absence of manifest error, a certificate from the Lender as to any amount due will b..."
 
No edit summary
 
(35 intermediate revisions by the same user not shown)
Line 1: Line 1:
Any finance lawyer will be familiar with the following kind of clause:
{{essay|boilerplate|conclusive evidence|}}
 
{{quote|In the absence of [[manifest error]], a certificate from the Lender as to any amount due will be conclusive evidence of the amount owing.}}
 
[[Conclusive evidence]] clauses are meant to support [[indemnities]]. There’s a wealth of snarkily-presented information in [[indemnities]] [[Indemnity|in the usual place]],ref>Go on — honestly — you’ll love it.</ref> but the key point to remember is that, a well-crafted {{tag|indemnity}} is meant to be a pre-agreement to pay an ''ascertainable sum'' of money: both people are meant to have a fairly clear handle on what is to be paid out.
 
In the traditional banking world where lenders obtain indemnities from their borrowers and are discounting bills and so on this is straight forward. A banker ought to know how much he is owed, and how much interest, and there ought not to be a tedious back and forth with a mendacious defendant trying prolong the legal battle about it. That only benefits one person, as we all know, O dear [[Mediocre lawyer|attorney]].
 
Now, these days indemnities are thrown around willy nilly by all kinds of [[mediocre lawyer|moron]] in the capital markets business, to cover all kinds of inappropriately indeterminate things. It will not shock me if I see an indemnity claimed for “any and all losses, costs, damages, liabilities, disbursements, expenses claims of whatever kind we may experience at any time merely as a function of drawing a breath”.
 
I mean, go for your life. Good luck enforcing that. And, really, good luck trying to stick in a clause saying {{quote|In the absence of [[manifest error]], a certificate from the Lender as to any such “Loss” will be conclusive evidence of the amount owing.}}
 
{{seealso}}
*[[Indemnity]]
*[[Manifest error]]

Latest revision as of 09:19, 2 September 2024

Boilerplate Anatomy™
Tell me more
Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

Any finance lawyer will be familiar with the conclusive evidence clause. These beauties are meant to support — dramatic look gopherindemnities. There’s a wealth of snarkily-presented information in indemnities in the usual place[1] but the key point to remember is that, a well-crafted indemnity[2] is meant to be a pre-agreement to pay an ascertainable sum of money: both parties are meant to have a fairly clear handle on what will have to be paid out.

Of course, as we well know, most indemnities are not well-crafted, but will be hopelessly vague, woolly, all-you-can-possibly-think-of affairs — just the kind of thing that isn’t “readily ascertainable”, at least not without the need for the a full adversarial process, with a day’s cross examination from Sir Jerrold Baxter-Morley, Q.C., to thrash them out.

What to do? Light-bulb moment! Have someone issue a certificate of indebtedness! Better still, have the counterparty agree, in advance, that it will be conclusive of the amount owed! Brazen though this strategy seems, it must have worked for a time, because we now find conclusive evidence clauses a part of standard boilerplate in any kinds of financing document — even, entertainingly, those without indemnities — to the point where few people know what the provision is even for, and even fewer challenge it. Well, dear reader, now you do, and you can!

In the traditional banking world — the one where lenders are prudent community pillars, obtain only the indemnities they need and that can be justified before a jury of their peers, and borrowers understand their place in the world — this is all straightforward: A banker ought to know how much she is owed, and how much interest, and how it compounds, and ought not to be subjected to a tedious back-and-forth with a mendacious borrower trying prolong process of paying. That sort of carry-on only benefits one person, as we all know, O dear attorney.

Thus, you will see that tell-tale caveat: “in the absence of manifest error”: where the sum claimed was obvious and not really in dispute; the bank did certify it but a fly got in the typewriter or some such thing and they sent out a certificate containing obviously the wrong number. Well, clearly that’s not conclusive, right?

But, alas, we do not live in such sensible times. The banking world is populated by idiots. These days indemnities are thrown around willy-nilly in the capital markets business, to cover all kinds of stupidly indeterminate, inappropriate things. It will not shock an experienced counsel to see an indemnity claimed for “any and all losses, costs, damages, liabilities, disbursements, expenses claims of whatever kind we may experience at any time in any space-time continuum, merely as a function of drawing a breath”.

This is outrageous, but well paid members of the legal profession will defend it to the hilt, which they will then try to bury in someone’s back, in the process pinning a certificate of indebtedness between the adjacent shoulder blades.

Eventually, even those who revere correct principle over grubby pragmatism will feel cowed and will give in. Life is too short. Have your stupid conclusive evidence clause.

But, good luck enforcing it. And, really, good luck sticking in a clause saying “In the absence of manifest error, a certificate from the Lender as to any “Loss” will be conclusive evidence of the amount owing” and getting a tribunal of fact to pay it the blindest bit of attention.

Premium content
Here the free bit runs out. Subscribers click 👉 here. New readers sign up 👉 here and, for ½ a weekly 🍺 go full ninja about all these juicy topics👇
  • A review of what the common law authorities think Manifest error means in the context of a conclusive evidence certificate

See also

References

  1. Go on — honestly — you’ll love it: Indemnity
  2. Much talked about, seldom seen.