A legal opinion expresses the opinion giver's professional judgment on questions of law
or procedure. For example:
Requests for "opinions" on essentially factual questions, opinions that are not cost
effective and opinions that address questions beyond the competence of a business lawyer are
generally viewed as inappropriate. Some of those opinions are discussed below.
An opinion giver occasionally will be asked for an opinion that the Company has "good
and marketable title" or "good and valid title" to its assets or that the Company has transferred title to certain assets to a buyer. The Committee is of the view that lawyers should not be asked
for an opinion on title to assets.
Sometimes an opinion giver is asked for an opinion on the form of the document that is
intended to transfer title. An illustration of the form of such an opinion follows:
The Committee wishes to point out, however, that specific issues relating to real estate
and the application of the Uniform Commercial Code to the transfer of assets are beyond the
scope of this Report.
An opinion on the enforceability of an Agreement does not address the effect of
fraudulent transfer laws. The "bankruptcy exception" to the standard remedies opinion excludes
the effect of fraudulent transfer laws from the opinion.
A specialized practice has developed in structured finance involving the rendering of
opinions to rating agencies and investors in connection with the establishment of special purpose
entities acquiring assets from related parties. In these transactions, opinion givers do give
reasoned opinions on bankruptcy-related issues, including substantive consolidation, "true sales"
and restrictions on access to bankruptcy.
The following opinions are addressed elsewhere in this Report and, for the reasons there
indicated, should normally not be requested or given:
291 Readers of this Report may also wish to review the list of disfavored opinions set forth in the ABA Guidelines § 4. See also the discussion in Part IV, Section B of this Report. Back
292 In connection with the purchase and sale of assets, seller's counsel may be asked for an opinion that the
assets are free and clear of all liens, encumbrances, and adverse claims. In giving opinions on asset sales,
opinion givers should consider the application of Division 6 of the Uniform Commercial Code relating to
bulk sales. California is one of a few states that has not repealed Division 6 of the Uniform Commercial
Code, despite the long-standing recommendation by the Uniform Commercial Code Committee of the
Business Law Section of the California Bar Association that the California Legislature should do so.
of the UCC Committee of the Business Law Section of the State Bar of California Recommending Repeal of
Division 6 of the California Commercial Code Regarding Bulk Sales dated December 1, 2003.)
For a variety
of reasons, it has become standard business practice for many buyers in California to waive compliance with
the California bulk sales law. For this reason, and because title to most types of personal property is affected
significantly by facts that a lawyer cannot determine without great cost or at all, lawyers generally do not
render an opinion that assets are free and clear of all liens, encumbrances, and adverse claims (except for
"free from adverse claim" opinions with respect to securities and instruments).
293 See Appendix 10 ("Report of the Exceptions Committee") to the Remedies Report at 4-6. Back
294 See TriBar Opinion Committee, Opinions in the Bankruptcy Context: Rating Agency, Structured Financing,
and Chapter 11 Transactions
, 46 BUS. LAW. 717 (1991). Back
Appendices / Table of Contents