Closing opinions are delivered in financings and acquisitions and are narrower than their recipients expect.
Standard coverage. Due organisation, valid existence and good standing; power and authority to enter and perform; due authorisation, execution and delivery; enforceability; no conflict with the organisational documents, with specified agreements and with specified laws; and no consents required except as stated.
Enforceability qualifications. The bankruptcy exception, the equitable principles exception, and a list of provisions that may be unenforceable — waivers of jury trial, self-help, indemnity for one’s own negligence, liquidated damages, and choice of forum.
Assumptions and qualifications. Genuineness of signatures, capacity of natural persons, and the accuracy of factual representations. Knowledge qualifiers defined.
What is not covered. Tax, accounting, solvency, and the commercial terms. Opinions are not diligence and do not substitute for it.
Who may rely. Named addressees, sometimes with permitted successors and assigns.
Local counsel opinions where the transaction involves other jurisdictions, and the relationship between them.
Cost and value. The value is in the diligence the opinion requires counsel to perform. The opinion itself is rarely the basis of a claim.