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This Practice Note considers the key issues which can arise when dealing with a local authority in England in a commercial finance transaction. It covers the types of acts a local authority may perform in a typical commercial finance transaction and considers the capacity and authority of local authorities when carrying out these acts. It also looks at typical representations and warranties from local authorities and other key issues to consider which are particular to dealing with a local authority in a commercial finance transaction, such as their power to invest and Wednesbury unreasonableness.

Note that this Practice Note covers commercial finance provided to local authorities. It does not cover other funding sources such as grants available to local authorities, which are beyond the scope of this Practice Note. It also does not cover local authorities in Wales.

The key questions that arise when dealing with a local authority in the context of a commercial finance transaction are in relation to the capacity of a local authority