This note considers the use of material adverse change (MAC) (also known as material adverse effect (MAE)) clauses in finance documents and discusses some of the negotiation points that may be relevant to borrowers and lenders. This note also discusses when a MAC event of default might be invoked by the lender and the views of the courts where such action has been challenged.

The interpretation and commercial application of MAC clauses has received considerable focus during the 2019 novel coronavirus (COVID-19) pandemic.