Governmental approvals no conflicts: Overview, definition, and example
What is "governmental approvals no conflicts"?
Governmental approvals no conflicts refers to a representation or warranty in contracts where a party affirms that:
It has obtained all necessary approvals, consents, permits, or licenses from relevant governmental or regulatory authorities required for the execution and performance of the agreement.
The execution and performance of the agreement will not conflict with applicable laws, regulations, or other agreements to which the party is bound.
For example, a company entering into a merger agreement might represent that it has secured antitrust clearance or other necessary regulatory approvals and that the merger will not violate existing agreements or laws.
Why is "governmental approvals no conflicts" important?
This provision is important because it ensures that all regulatory requirements are met and that the agreement can proceed without legal, regulatory, or contractual barriers. It provides assurance to the other party that entering into and performing the agreement will not create legal disputes or compliance risks.
For businesses, this representation mitigates risks of delays, penalties, or invalidation of the agreement due to missing approvals or conflicting obligations. For counterparties, it offers confidence that the transaction or arrangement is legally viable and enforceable.
Understanding "governmental approvals no conflicts" through an example
Imagine a company is entering into a joint venture agreement to operate in a regulated industry such as telecommunications. The agreement includes a clause where the company represents that it has obtained all necessary operating licenses and government approvals. Additionally, the company affirms that the joint venture does not conflict with its existing obligations under prior agreements or applicable laws.
In another example, a real estate development company signs a purchase agreement for land. The agreement requires the company to represent that it has secured zoning approvals and that the purchase will not violate any existing land-use restrictions or contractual commitments.
An example of a "governmental approvals no conflicts" clause
Here’s how a governmental approvals no conflicts clause might appear in an agreement:
“The Party represents and warrants that (i) it has obtained all necessary governmental and regulatory approvals, permits, and consents required to execute and perform its obligations under this Agreement, and (ii) the execution, delivery, and performance of this Agreement do not and will not conflict with or result in a breach of any applicable law, regulation, or contractual obligation to which the Party is subject.”
Conclusion
The "governmental approvals no conflicts" provision ensures that all regulatory and legal requirements are met and that the agreement can be executed without causing conflicts with existing laws or obligations. For businesses, this representation reduces risks of delays, penalties, or disputes. For counterparties, it provides confidence in the legality and enforceability of the agreement. Including a clear and precise provision regarding governmental approvals and conflicts is critical for ensuring compliance and protecting all parties in transactions or contracts.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.