Conditional Commitment Law and Legal Definition
In conditional commitment a promise becomes effective on the fulfillment of specified conditions. When a bank makes a conditional commitment for a loan, the loan amount is not given to the customer until s/he satisfies the conditions specified in the agreement. For example, a loan guarantee subject to one or more guarantors, or obtain insurance requirement.
According to 10 CFR 609.2 [Title 10 Energy; Chapter II Department of Energy; Subchapter H Assistance Regulations; Part 609 Loan Guarantees for Projects that Employ Innovative Technologies], Conditional Commitment means “a Term Sheet offered by DOE and accepted by the Applicant, with the understanding of the parties that if the Applicant thereafter satisfies all specified and precedent funding obligations and all other contractual, statutory and regulatory requirements, or other requirements, DOE and the Applicant will execute a Loan Guarantee Agreement; Provided that the Secretary may terminate a Conditional Commitment for any reason at any time prior to the execution of the Loan Guarantee Agreement; and Provided further that the Secretary may not delegate this authority to terminate a Conditional Commitment.”
