Opinions of Counsel in Corporate Transactions: Opinions on Compliance with the Company's Charter, By-laws, and Contractual Obligations

Abstract

The opinion delivered by company counsel at the closing of a corporate transaction typically contains a clause that addresses compliance by the company with its charter, by-laws and contractual obligations. One form of opinion confirms that execution and delivery by the company of the agreement in question and performance by the company of its obligations under the agreement will not conflict with or result in a breach of or default under the company's charter, by-laws or specified contracts. Another form of opinion focuses more broadly on all of the company's activities. This alternative opinion, often requested and often, with good reason, resisted, not only covers the points addressed in the narrower opinion but also confirms that the company is not in violation of its charter or by-laws or in default in the performance of its obligations under contracts to which it is a party or by which it is bound.

This article describes various formulations of the "no-conflicts" opinion, analyzes the scope and meaning of alternative opinion formulations, offers drafting recommendations, and concludes with several suggestions for solving "opinion problems."