A provision included in some bank loan commitment letters ( www.practicallaw.com/4-382-3352) which states that the commitment letter is a binding and enforceable agreement, requiring the parties to proceed with negotiating the loan documents in good faith. Funding of the loan is subject to satisfaction of the conditions precedent. The provision was created in response to the decision in Amcan Holdings, Inc. v. Canadian Imperial Bank of Commerce (894 N.Y.S.2d 47 (N.Y. App. Div. 2010)) (see Legal Update, An Explicit Summary of Loan Terms Held Not Binding Under New York Law ( www.practicallaw.com/4-501-3302) ).
This provision is less common in middle market ( www.practicallaw.com/9-518-8851) loan deals.