A longstop date is a deadline linked to completing a transaction or satisfying conditions in the sale agreement. If the deadline is missed, the agreement may give one or both parties a right to terminate. The wording determines what happens.
It is different from a planned completion date. Completion may be scheduled around when the conditions are satisfied; the longstop date deals with what happens if the process takes too long.
Does the agreement end automatically?
Do not assume it does. Check who has a termination right, whether notice is required, whether a party in default can use that right and whether any extension has already been agreed.
The longstop clause needs to be read with the conditions precedent, notice provisions and other termination rights.
How should the date be chosen?
Work backwards from the approvals, consents and other steps the transaction actually needs. Identify who is responsible for each step and what happens if there is a delay.
There is no single period suitable for every sale. If competition or foreign investment approval is relevant, check the current process rather than treating a generic completion timetable as a substitute. The ACCC’s assessment guidance explains why review timelines can change.
What if a consent is still outstanding?
As an illustration, the buyer is ready to complete but a required landlord consent has not arrived. The passing of the longstop date does not, by itself, tell you whether the seller can end the agreement. The condition, responsibility for obtaining consent, extension provisions and termination wording all matter.
Before agreeing an extension, identify which obligations and rights continue during the extra period. If the deadline is approaching, get the agreement reviewed before sending a notice or assuming the sale has ended.