Fern Schofield & Michael Ranson set out the various means of securing overage obligations
- Securing overage obligations raises a variety of legal, practical and commercial difficulties.
- In order to advise clients about how best to secure overage, practitioners need to be aware of a variety of legal principles, statutes and case law.
- This article is a guide to those legal issues, with suggestions as to three different ways in which overage obligations might be secured and a warning about the use of restrictive covenants.
When it comes to securing overage obligations, a number of different options present themselves, each with their own advantages and disadvantages. Which is the best choice in the context of any given transaction will depend on the legal landscape and various practical and commercial priorities.
Why is it difficult to secure overage obligations?
Before turning to the different methods of securing obligations to pay overage, and the advantages and disadvantages of each, it is helpful to take a step back and consider why it is that successfully securing an obligation to pay
