Before entering restructuring discussions, lenders should obtain a pre-negotiation agreement. It costs one page and prevents the most common lender liability claims.

What it says. That discussions are for settlement purposes and inadmissible; that no agreement of any kind arises unless reduced to writing and signed by authorized representatives; that no oral agreement, course of conduct or forbearance modifies the loan documents; that either party may terminate discussions at any time without liability; and that the lender’s rights and remedies are reserved and unaffected.

Acknowledgments. The outstanding balance, the defaults, the validity and perfection of the liens, and that the borrower has no claims or defenses — a release, in substance, of anything to date.

Who signs. The borrower, every guarantor, and every party granting collateral. A pre-negotiation agreement missing a guarantor omits the party most likely to raise a claim.

Why it works. Most lender liability theories — oral modification, waiver, estoppel, breach of good faith, duress — depend on the borrower’s account of conversations. This agreement makes those conversations legally inert.