Sample California Third-Party Legal Opinion for Business Transactions By the Opinions Committee of the Business Law Section of The State Bar of California

 Sample California Third-Party Legal Opinion for Business Transactions (Without Footnotes)

Please note: Items in brackets such as [Name of Borrower] and [Date] are intended to provide guidances for you to customize the document for your purposes.

[Date] [Name of Lender], a National Banking Association [Address of Lender]


Ladies and Gentlemen:

We have acted as counsel to [Name of Borrower], a California corporation (the "Borrower"), and [Name of Guarantor], a California limited liability company (the "Guarantor") in connection with the [Name of Agreement] (the "Loan Agreement"), dated as [Date], of between the Borrower and [Name of Lender], a National Banking Association (the "Lender"). This opinion is delivered to you pursuant to Section [Section Number] of the Loan Agreement. The Borrower and the Guarantor are sometimes referred to in this letter individually as a "Loan Party", and collectively as the "Loan Parties." Each capitalized term that is defined in the Loan Agreement and that is used but not defined in this letter has the meaning given to it in the Loan Agreement.

A. Documents Examined

We have examined the following documents:

(i) the Loan Agreement;

(ii) the Promissory Note;

(iii) the Guaranty;

(iv) the Articles of Incorporation of the Borrower, certified by the California Secretary of State as of and certified to us by an officer of the Borrower as being complete and in full force and effect as of the date of this opinion;

(v) the Bylaws of the Borrower, certified to us by an officer of the Borrower as being complete and in full force and effect as of the date of this opinion;

(vi) records certified to us by an officer of the Borrower as constituting all records of proceedings and actions of the board of directors [and the shareholders] of the Borrower relating to the Loan;

(vii) a Certificate of Status--Domestic Corporation with respect to the Borrower, issued by the California Secretary of State on

(viii) the Articles of Organization of the Guarantor, certified by the California Secretary of State as of and certified to us by an of the Guarantor as being complete and in full force and effect as of the date of this opinion;

(ix) the Operating Agreement of the Guarantor dated as of , and certified to us by [an officer] of Guarantor as being in full force and effect as of the date of this opinion;

(x) records certified to us by [an officer] of the Guarantor as constituting all records of proceedings and actions of the [manager(s) and members]' of the Guarantor relating to the Loan;

(xi) a Certificate of Status -- Domestic Limited Liability Company with respect to the Guarantor, issued by the California Secretary of State on

(xii) a certificate of the [Chief Financial Officer, General Counsel or other appropriate officer] of the Borrower identifying certain agreements and instruments to which the Borrower is a party or by which the Borrower's properties or assets are bound (the "Certificate Relating to Agreements");'

(xiii) a copy of each of the agreements and instruments identified in the Certificate Relating to Agreements, certified to us as being a true and correct copy of the original ("Material Agreements");

(xiv) a certificate of the [Chief Financial Officer, General Counsel or other appropriate officer] of the Guarantor identifying certain agreements and instruments to which the Guarantor is a party or by which the Guarantor's properties or assets are bound (the "Guarantor's Certificate Relating to Agreements");

(xv) a copy of each of the agreements and instruments identified in the Guarantor's Certificate Relating to Agreements, certified to us as being a true and correct copy of the original ("Guarantor Material Agreements"); and

(xvi) a certificate of each of [the Chief Financial Officer, General Counsel or other appropriate officer] of the Borrower and the Guarantor as to certain factual matters relevant to this opinion.'

Each of the documents identified in items (i) through (iii) above is sometimes referred to herein as a "Loan Document."

We have also examined such other documents and made such further legal and factual examination and investigation as we deem necessary for purposes of rendering the following opinions.'

B. Certain Assumptions

We have assumed, for purposes of the opinions expressed herein that:

(a) the Lender is (i) a subsidiary of a bank holding company (as such terms are defined in Section 3707 of the California Financial Code) or is a bank organized under the laws of the United States or any State thereof (ii) a foreign (other nation) bank described in Section 1716 of the California Financial Code meeting the criteria for exemption set forth therein, (iii) licensed under the California Finance Lenders Law (Cal. Fin. Code § 22000 et seq.), or (iv) a lending institution otherwise belonging to an exempt class of persons and, as a result thereof, that the Lender is exempt from the restrictions of Section 1 of Article XV of the Constitution of the State of California relating to rates of interest upon the loan of money;

(b) the Loan will be made by the Lender for its own account or for the account of another person that qualifies for an exemption from the interest rate limitations of California law; and

(c) there is no agreement by the Lender to sell participations or any other interest in the Loan to be made under the Loan Agreement to any person other than a person that qualifies for an exemption from the interest rate limitations of California law.'

C. Opinions

Based on the foregoing, and subject to the qualifications set forth in Section E below, it is our opinion that:

1. The Borrower is a corporation validly existing and in good standing under the laws of the State of California.

2. The Borrower has the corporate power to enter into and perform its obligations under each of the Loan Documents to which it is a party.

3. The Borrower has taken all corporate action necessary to authorize the execution and delivery of, and the performance of its obligations under, each of the Loan Documents to which it is a party; and the Borrower has duly executed and delivered the Loan Documents to which it is a party.

4. The Guarantor is a limited liability company existing in good standing under the laws of the State of California.

5. The Guarantor has the limited liability company power to enter into and perform the Guaranty.

6. The Guarantor has taken all limited liability company action necessary to authorize the execution and delivery of, and the performance of its obligations under, the Guaranty; and the Guarantor has duly executed and delivered the Guaranty.

7. Each of the Loan Documents to which the Borrower or Guarantor is a party is a valid and binding obligation of the Borrower or the Guarantor, as the case may be, enforceable against it in accordance with its terms.

8. All consents, approvals, authorizations or orders of, and filings, registrations and qualifications on the part of the Borrower or the Guarantor with, any United States federal or California state regulatory authority or governmental body required to execute and deliver, and perform their obligations under, the Loan Documents have been obtained or made.

9. The execution and delivery by Borrower or the Guarantor of the Loan Documents to which it is a party do not, and the performance by them of their respective obligations under those Loan Documents will not:

(a) violate the Articles of Incorporation or the Bylaws of the Borrower or the Articles of Organization or the Operating Agreement of the Guarantor;

(b) result in a breach of or constitute a default under any Material Agreement or Guarantor Material Agreement or result in the creation of a security interest in, or lien upon, any of the Borrower's or the Guarantor's properties or assets under any Material Agreement or Guarantor Material Agreement, but excluding in any such case financial covenants and similar provisions therein requiring financial calculations or determinations to ascertain compliance;

(c) violate any judgment, order or decree of any court or arbitrator [identified on Schedule-- to the Loan Agreement] [or] [applicable to either of them and known to us]; or

(d) violate any law, rule or regulation applicable to Borrower or the Guarantor.

D. Confirmations

We are not representing the Borrower or the Guarantor in any action or proceeding that is pending, or overtly threatened in writing by a potential claimant, that seeks to enjoin the transaction or challenge the validity of the Loan Documents or the performance by the Borrower or the Guarantor of their respective obligations thereunder.

E. Certain Qualifications

Our opinions are limited to the federal law of the United States and the law of the State of California.30 Furthermore, we express no opinion with respect to compliance with any law, rule or regulation that as a matter of customary practice is understood to be covered only when an opinion refers to it expressly. Without limiting the generality of the foregoing [and except as specifically stated herein,] we express no opinion on local or municipal law, antitrust, environmental, land use, securities, tax, pension, employee benefit, margin, insolvency, fraudulent transfer, antiterrorism, money laundering, or investment company laws and regulations.

Our opinions are subject to the following additional qualifications:.

(1) Our opinions are subject to (a) bankruptcy, insolvency, reorganization, arrangement, moratorium and other similar laws of general applicability relating to or affecting creditors' rights generally; and (b) general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law.

(2) Where a statement is qualified by "to our knowledge" or any similar phrase, that knowledge is limited to the actual knowledge of lawyers currently in this firm who have been involved in representing the Borrower or the Guarantor in connection with the Loan Documents. Except as otherwise expressly indicated, we have not undertaken any independent investigation to determine the accuracy of any such statement, and no inference as to our knowledge of any matters bearing on the accuracy of any such statement should be drawn from the fact of our representation of the Borrower.

(3) We advise you that, on statutory or public policy grounds, waivers or limitations of the following may not be enforced: (i) broadly or vaguely stated rights, (ii) the benefits of statutory, regulatory or constitutional rights, (iii) unknown future defenses, (iv) rights to one or more types of damages, and (v) indemnities.

(4) [The enforcement of Section -- of [the Loan Agreement], relating to the payment of attorneys' fees and costs, is subject to the limitations of Section 1717 of the California Civil Code.]

(5) [We express no opinion regarding the enforceability of [Section .] of the [Loan Agreement], which purports to fix the venue of proceedings relating to the Loan.]

(6) [We express no opinion regarding the enforceability of [Section _] of the [Loan Agreement], which purports to waive the parties' rights to a jury trial.]

(7) [We advise you of California statutory provisions and case law to the
effect that a guarantor may be discharged, in whole or in part, if the beneficiary of the guaranty alters the obligation of the principal, fails to inform the guarantor of material information pertinent to the principal or any collateral, elects remedies that may impair either the subrogation or reimbursement rights of the guarantor against the principal or the value of any collateral, fails to accord the guarantor the protections afforded a debtor under Division 9 of the California Uniform Commercial Code or otherwise takes any action that prejudices the guarantor, unless, in any such case, the guarantor has effectively waived such rights or the consequences of such action or has consented to such action. While California Civil Code Section 2856 and case law provide that express waivers of a guarantor's right to be discharged, such as those contained in the Guaranty, are generally enforceable under California law, we express no opinion regarding the effectiveness of the waivers in the Guaranty.

(8) [We advise you that a court may refuse to enforce [Section -- of the Loan Agreement], which provides [for judicial review of arbitration awards/other reason]. We express no opinion regarding the effect of the inclusion of that provision in [the Loan Agreement] upon the enforceability of the parties' agreement to submit disputes to arbitration.]

(9) We express no opinion regarding the enforceability of [set out any provision of the Loan Documents determined to provide for a penalty, liquidated damages, acceleration of future amounts due (other than principal) without appropriate discount to present value, late charges, prepayment charges, or increased interest rates upon default that is determined to be unenforceable for a reason other than one included within qualification (1).]

This letter may be relied upon solely by the Lender for use in connection with the transactions contemplated by the Loan Agreement. No other party may rely upon this letter or the opinions expressed herein without our prior written consent.

Very truly yours,
ABLE & BAKER LLP

Sample Opinions - Intro / Sample Letter With Footnotes