Daily Development for
Monday, August 18, 1997

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

VENDOR/PURCHASER; CONDITIONS; ATTORNEY APPROVAL: Contract containing attorney approval clause permits the approving attorney to consider matters extrinsic to the contact.

Ulrich v. Daly, 650 N.Y.S.2d 496 (App. Div. 1996).

The attorney approval clause stated that "this agreement is contingent upon seller obtaining approval of this agreement by the attorney as to all matters contained therein." The property owner in the interim period had received additional and better offers and their attorney therefore disapproved the contract. Plaintiffs contended the foregoing clause precludes the seller's attorney from considering anything other than the language of the contract itself. The court disagreed because there was nothing in the attorney approval clause which prohibited the attorney from considering matters extrinsic to the contract in deciding whether to approve or disapprove matters contained in the contract. The court determined that such an interpretation would severely limit an attorney's ability to review the entire contractual circumstances.

Comment: It is because of cases like this that many professionals who negotiate over attorney approval clauses insist on language that the attorney may review only as to form, and not as to the substance of the agreement. Unfortunately, such language goes too far, at least insofar as the party protected by the clause is concerned. There should be language that both protects the deal and permits the attorney to provide rationale advice to his or her client. But it is difficult for the editor to think of an approach that provides substantive protection to both sides.

Perhaps other DIRTers have been successful in drafting good language for such a clause. Any suggestions?

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