In the case of merger and acquisition transactions (“Transaction”), the signing of an agreement and realization of the Transaction typically occur at separate times. For this reason, parties may bind the Transaction planned to be completed in the future to certain conditions precedent (“CP”) with the agreement they will conclude, thus they want to ensure that the risks are minimized by taking the Transaction under protection in the intervening period until the closing date.


Parties of Transaction may bind realization of the closure corresponding to the time when the parties fulfill their obligations to each other simultaneously and fully with certain CP's when signing the agreement. CPs can be defined as a contractual condition that must be fulfilled before a right or obligation arises.

As a matter of fact, it has been accepted in Turkish Law that agreements can be made conditional and two different types of conditions have been regulated as delaying and disruptive. Unless otherwise agreed by the parties, agreements with delaying conditions will only be taken effect in case the condition is fulfilled. The CP's agreed by the parties in the Transactions are also a delaying condition for the completion of the Transaction and if the CPs are not fulfilled, the parties may avoid performance or attest the invalidity of the agreement regarding the Transaction.

The CP's can be foreseen for both the buyer (transferee) and the seller (transferor) and there is no limitation in terms of the CP's that the parties can agree on. Except for the CP's set for the purpose of perform or non-perform of an act contrary to the law or morality, any CP can be set forth freely by the parties as CPs. The purpose of the CP's is to ensure that the Transaction realizes in line with the will of the parties and to prevent the performance of the transaction in case of a situation contrary to the will of the parties. However, in practice, the parties usually draft the said CPs for the seller. In this context, significant benefits have been provided in behalf of the buyer. Particularly, the seller will ensure that all the necessary conditions have been met to manage in the ordinary course of business, not any assets are alienated from the target business to be taken over prior to the date of signature and the closing date and that no liability from the seller will occur before the buyer in case of acquisition of the business.

In this regard, while CPS are regulated in an agreement;

  1. Deadline for fulfillment of CP's
  2. Consequences of not fulfilling the CP's
  3. Steps to fulfill the CP's
  4. Determining and determining whether the CPs are fulfilled

should be determined in detail.

Before deciding on the aforementioned CP's, it is recommended that the parties determine the possible risks by making a legal due diligence assessment and decide on the CPs to eliminate or minimize these risks.


CPs are a contractual condition that must be fulfilled before a right or obligation arises. CPs are important contractual instruments that serve as gateways or barriers to the validity and/or general performance of the agreement. CPs are not only be meant to implement in merger and acquisition deals but also in a wide variety of contract types such as construction, real estate and supply.

Failure to fulfill the CPs will prevent the Transaction from realization, and at the same time, if a provision in this regard is drafted in the agreement signed in relation to the Transaction, it may result in the payment of penal clauses and/or compensation for damages by the party under responsibility.

CPs are not always easy to define and implement. In some cases, a provision may not appear as a CP but still make sense in the agreement as a CP, or a provision may appear as a CP but the CP may not be enforceable. In order to determine whether a provision is a CP or not, the CPs must be specified and fulfilled in the content of the agreement concluded in relation to the Transaction. If a CP is not sufficiently detailed, the provision may not qualify as a CP -in the event of a dispute- and failure to meet the CPs may constitute an ordinary breach of contractual obligations. In this respect, it is extremely important to draft detailed and clear-cut CPs specific to the type of the Transaction, the parties to the Transaction, and the sector for each Transaction.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.