Lawyers are often called upon to "opine" whether a corporate transaction is duly authorized and otherwise legal. When lawyers report their finding in a formal written manner, such a document is called a "legal opinion." The drafting of such a legal opinion is subject to very particular rules and requires an investigation into corporate authority known as "due diligence."

1. CORPORATIONS
MODULE IV: AUTHORIZATION
LESSON 3: LEGAL OPINIONS
Professor Seth C. Oranburg
Duquesne University School of Law
Spring 2020

2. Learning Objectives
■Explain what are legal
opinions and describe what
function they serve
■Identify the parts of a legal
opinion

3. What Are Legal Opinions?
■Legal Opinions express lawyer’s
conclusion as to how the relevant
law applies to a fact pattern
■They are requested by parties who
want assurances that transaction is
binding and does not violate any
legal standards

4. What is a “third party” legal
opinion?
■A.k.a. “remedies opinion”
■Assures a third party that the
transaction documents will
constitute a legal, binding
obligation of the lawyer’s client,
enforceable in accordance with
their terms.

5. Types of Legal opinions
■“Qualified” or
■“Unqualified”
–Depends on degree of
confidence

6. Simulation: Third Party
Legal Opinion Walkthrough
■From A to Z S

7. A
[Law Firm Letterhead]
[Date]
Ladies and Gentlemen:
We have acted as counsel to ABC
Corporation (the “Company”) in
connection with the transaction (the
“Transaction”) contemplated by the
Sales Agreement dated December 31,
2008 (the “Agreement”) between the
Company and XYZ Ltd. (the “Other
Party”).
■ Salutation

8. B
We have reviewed such documents and
considered such matters of law and fact as
we, in our professional judgment, have
deemed appropriate to render the opinions
contained herein. With respect to certain
facts, we have considered it appropriate to
rely upon certificates or other comparable
documents of public officials and officers or
other appropriate representatives of the
Company, without investigation or analysis
of any underlying data contained therein.
■ Reliance
on
records

9. C
The opinions set forth herein are limited to
matters governed by the laws of the State of
New Columbia, and no opinion is expressed
herein as to the laws of any other jurisdiction.
■ Governing
Law

10. D
Based upon and subject to the foregoing and
the further assumptions, limitations and
qualifications hereinafter expressed, it is our
opinion that:
■ “Opinion”

11. E
1. The Company is duly incorporated, validly
existing and in good standing under the laws
of the State of New Columbia.
■ Due
incorporation
and good
standing

12. F
2. Company is authorized to transact business
in the State of New Columbia.
■ Business
authorization

13. G
3. The authorized capital stock of the
Company consists of 1,000,000 common
shares, of which 750,000 shares are
outstanding. The Shares have been duly
authorized and validly issued, and are fully
paid and nonassessable.■ Authorized
shares

14. H
4. The Company has the corporate power to
execute, deliver and perform its obligations
under the Transaction Documents.
■ Power
and
authority

15. I
5. The Company has authorized the
execution, delivery and performance of the
Transaction Documents by all necessary
corporate action and has duly executed and
delivered the Transaction Documents.
■ Authority
for
specific
action

16. J
6. The Agreement constitutes the legal, valid
and binding obligation of the Company,
enforceable against the Company in
accordance with its terms.
■ Remedies

17. K
7. The execution and delivery by the Company of the
Agreement and the performance by the Company of
its obligations therein (a) do not violate the articles of
incorporation or bylaws of the Company, (b) do not
breach or result in a default under any Other
Agreement, and (c) do not violate the terms of any
Court Order. For purposes hereof, (I) the term “Other
Agreement” means any of those agreements listed on
the officer’s certificate rendered to us in connection
with this opinion and (II) the term “Court Order”
means any judicial or administrative judgment, order,
decree or arbitral decision that names the Company
and is specifically directed to it or its properties and
that is listed on the officer’s certificate rendered to us
in connection with this opinion or that is known to us.
■ No
internal
violation

18. L
8. The execution and delivery by the
Company of the Agreement, and performance
by the Company of its obligations therein, do
not violate applicable provisions of statutory
laws or regulations.
■ No
violation
of law

19. M
9. No consent, approval, authorization or
other action by, or filing with, any
governmental authority of the United States
or the State of New Columbia is required for
the Company’s execution and delivery of the
Transaction Documents and consummation
of the Transaction.
■ No
approvals
or
consents

20. N
The opinions expressed above are subject to
the following assumptions, qualifications and
limitations:
■ Assumptions
and
qualification
s

21. O
(a) This opinion is subject to the effect
of applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance,
moratorium and similar laws affecting
the enforcement of creditors’ rights
generally.
(b) This opinion is subject to the effect
of general principles of equity
(regardless of whether considered in a
proceeding in equity or at law), which
may, among other things, deny rights
of specific performance.
■ Exceptions

22. P
(c) We do not express any opinion as to
the enforceability of provisions of the
Agreement purporting to require a party
thereto to pay or reimburse attorneys’ fees
incurred by another party, or to indemnify
another party therefore, which provisions
may be limited by applicable statutes and
decisions relating to the collection and
award of attorneys’ fees.
(d) We do not express any opinion as to
the enforceability of provisions of the
Agreement providing for arbitration.
■ Exceptions

23. Q
In addition, we advise you that to our
knowledge, there is no action, suit or
proceeding at law or in equity, or by or
before any governmental instrumentality or
agency or arbitral body, now pending or
overtly threatened against the Company,
except as listed on the officer’s certificate
rendered to us in connection with this
opinion.
■ No
litigation

24. R
This opinion letter is delivered solely for
your benefit in connection with the
Transaction and may not be used or relied
upon by any other person or for any other
purpose without our prior written consent in
each instance. Our opinions expressed herein
are as of the date hereof, and we undertake
no obligation to advise you of any changes in
applicable law or any other matters that may
come to our attention after the date hereof
that may affect our opinions expressed
herein.
■ Reliance

25. S
Very truly yours,
Signature of Opining Lawyer or Firm
■ Signature

26. Conclusions
■ Legal opinions are documents lawyers write to
give comfort to third parties that corporate
transactions are authorized and legal
■ These opinions are highly stylized documents
subject to a complex set of rules and for these
reasons are often handled by experts within a
firm
■ Preparation of a legal opinion requires “due
diligence” to assure the opinion is correct and
complete