How to Decide Whether a MAC Condition Is Engaged Before Completion

To decide whether a material adverse change (MAC) condition is engaged after signing and before completion, ask only whether a change, event, or effect has happened in that gap. A fact already known at signing is outside the question. Where the dates differ, mark the signed definition in clause order and hold the termination notice if any mark fails.

Disclaimer: Checkory provides AI support, not legal advice. Consult a qualified lawyer for binding decisions.

When does this condition run, after signing and before completion?

A MAC clause lets the buyer terminate if an event that is sufficiently materially adverse occurs between signing and completion. Statute does not define it. If those two moments are the same, this condition has no interval to operate.

For example, Derwent Gauge Ltd signed to buy Amberley Metrology Ltd on 2 October 2026, and completion is Friday 23 October 2026, at an equity value of £2,400,000. Kirkland, on 23 October 2024, described the function from signing to completion, and A&O Shearman, on 28 October 2024, described termination if the defined change occurs after signing and before completion. The LexisNexis glossary allocates that risk between exchange and completion under English law, in the courts of England and Wales.

Pell Gauge was already late on the list disclosed at signing, so that lateness is not the change. A typical mistake is to treat it as the event because a Slack note on 16 October 2026 sounds urgent.

Which object does this definition name?

The definition names the business, financial condition, results of operations, properties, assets, liabilities, or operations of the Company, taken as a whole. It does not say “prospects”, and it does not say a short-term dip counts. A long list does not make a cancellation in this three-week window long-term.

Freshfields, on 17 October 2024, wrote that an effect on the company is probably enough. Simmons & Simmons, on 22 October 2024, says long-term impact is the starting point unless the clause captures short-term dips. In BM Brazil v Sibanye [2024] EWHC 2566 (Comm), handed down on 10 October 2024, Butcher J treated material as significant or substantial, measured in years rather than months. The National Archives copy is that judgment. Do not copy its percentages onto this clause.

On 14 October 2026, Pell Gauge cancelled a £40,000 order. In practice it is not long-term just because the list is long. More than de minimis is not the test.

What does aggregation stop at on this cancellation?

“Individually or in the aggregate” covers aspects of the same change, event, or effect. Butcher J held that those words do not extend the change to something distinct and pre-existing. A different post-signing matter is not an aspect of this cancellation.

The Slack note adds Pell Gauge’s lateness at signing to the 14 October cancellation. That lateness was already disclosed, so it stays out. Several small post-signing aspects of this one cancellation can be read together.

Where do the seller carve-outs sit against the proviso?

Apply the carve-outs before the disproportionate proviso. Limb (a) is general economic, market, or industry conditions, limb (b) is any change in law, and limb (c) is the announcement or performance of this agreement. The proviso applies to (a) and (b) only, and it restores only the extra effect compared with other participants in the industry in which the Company operates.

The Slack note says the whole gauge sector is down, so limb (a) applies until that extra effect is shown. Butcher J recorded the Travelport burdens: the seller proves the carve-out, and the buyer proves a disproportionate effect. There is no special English rule of narrow construction or a high burden, as Butcher J accepted from Cockerill J in Travelport at [134].

Limb (c) is not ordinary trading. It covers matters which occur because the agreement was entered into, not the workshop carrying on after signing. This draft gives limb (c) no proviso.

What does “would reasonably be expected” ask on the notice day?

“Would reasonably be expected” is one yes or no, not a range of serious views. It is objective, more likely than not, and a mere risk is not enough. It is judged when the notice would go out, looking forward.

Mayer Brown, citing paragraph 241, put a reasonable person in the parties’ position as at the date notice is given. Kirkland said both “is” and “would reasonably be expected” are judged when the notice is served, on information available to either party. On this file that day is 16 October 2026, and later events must not override that assessment.

Should the warranty stay on its own line?

The cancellation does not engage the condition merely because it revealed a customer the warranty already named. The list at signing already showed Pell Gauge as late. Here the MAC wording is a condition to completion, and the customer-list warranty is a different promise.

Mayer Brown says that pre-existing issues which the event reveals cannot be the ground for termination. Gibson Dunn, on 17 October 2024, said the buyer must establish the change within the contract, and a wrongful assertion risks liability for wrongful termination. Do not send the termination notice on the Slack note.

The marks on this condition do not justify sending the termination notice. A later private model does not reopen the assessment as at 16 October 2026. This agreement is read under English law, and a foreign test is not carried onto it.

The order is gap → object → aggregation → carve-outs then the proviso → more likely than not → the warranty on its own line. A force majeure list, the question whether a condition precedent is satisfied or waived, a commercial long-stop, a change-control procedure, and assignment and change of control are each separate from this condition.

A first pass (a structured read of the signed file) flags this condition. It does not decide whether to send the notice.