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GLOSSARY

Warranty limitations definition

Published by a LexisNexis Corporate expert

What does Warranty limitations mean?

Limitations of liability provisions limiting the seller's liability for breach of the warranties will typically be included in the SPA/APA.

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Share purchases—employment warranties, disclosure and indemnities

Share purchases—employment warranties, disclosure and indemnities On the acquisition of the entire issued share capital of an employer company (share purchase), while there will be a change in the shareholder(s) of the company, the contractual relationship between employee and employer will be unaffected; the share purchase itself does not give rise to a change of employer or any change to the contract of employment. This contrasts with the position on an asset purchase, where the Transfer of Undertakings (Protection of Employment) Regulations 2006, SI 2006/246 (TUPE 2006) operates to transfer the contracts of relevant employees to the buyer. TUPE 2006, SI 2006/246 also provides specific protection for employees in relation to variation of terms and dismissal, imposes obligations to inform and consult and requires the seller to provide certain employee liability information to the buyer—see: TUPE and asset purchases—overview. No such specific protections or information and consultation obligations arise on a share purchase. For information on employment warranties, disclosure and indemnities on an asset purchase, see Practice Note:...

Private equity investment—the acquisition process

Private equity investment—the acquisition process The acquisition of a company or business and assets in the context of a private equity buyout, while similar to a standard acquisition in many respects, has a number of key differences. These derive primarily out of issues arising from the status of the various parties who form part of the process, namely the private equity investor, the management team and the buyer (or newco) as well as the seller. For further information on structuring a private equity investment, see Practice Note: Buyouts. This Practice Note considers the key areas of due diligence and the acquisition documentation. Due diligence As in any share or business and asset purchase transaction, management and the private equity investors will need to conduct their own due diligence investigations into the target business. Purpose The purpose of due diligence from the perspective of a buyer is to allow it to identify possible deal breakers at an early stage, to establish areas of risk and how...

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Warranty limitations—pro-buyer—corporate seller—share purchase agreement

Warranty limitations—pro-buyer—corporate seller—share purchase agreement Insert the following as new definitions (if not already included) in the definitions and interpretation clause of the share purchase agreement: 1 Definitions and interpretation Fairly Disclosed • means[ fully, fairly and accurately] disclosed[ (relating specifically to the subject matter of the Warranty and without omitting any fact which may render the Warranty and the matter disclosed untrue, inaccurate and misleading)] in such manner and in such detail as to enable a buyer to make a clear, informed and accurate assessment of the facts, matters or circumstances concerned; Losses • means all liabilities, costs, expenses (including legal expenses), claims, actions, proceedings, damages, fines, penalties, loss of profit[ and Consequential Loss]; Tax Warranties • means the warranties[ and representations] set out in paragraph [insert number] of Schedule [insert number] and Tax Warranty means any one of them; Warranties • means the warranties[ and representations] set out in Schedule [insert number] and Warranty means any one of them; Warranty Claim...

Loan note provisions—share purchase agreement

Insert the following definitions as new definitions into clause 1 of Precedent: Share purchase agreement—pro-buyer—corporate seller—conditional—long form: 1 Definitions and interpretation [Completion Accounts Determination Date means the date on which the Completion Accounts are agreed pursuant to this Agreement;] Determination Date means the date on which a Relevant Claim becomes a Determined Claim in accordance with paragraph 1.1.1 of Schedule 9; Determined Claim means a Relevant Claim which has become a Determined Claim pursuant to paragraph 1.1.1 of Schedule 9 and determined and...

Dive into our 5 Precedents related to Warranty limitations

Are costs and expenses incurred by a buyer in bringing a warranty claim to be taken into account in calculating the monetary thresholds under the warranty limitations on liability?

Are costs and expenses incurred by a buyer in bringing a warranty claim to be taken into account in calculating the monetary thresholds under the warranty limitations on liability? The recoverable loss under a share purchase agreement limitation of liability clause for breach of warranty is governed by contract law. The warranties are contractual statements or assurances as to the condition of the target company, its business, assets and liabilities. If a seller gives a warranty in a share purchase agreement that proves to be inaccurate, untrue or misleading, this will give rise to a claim for breach of warranty entitling the buyer to an action for damages against the seller. The limitations of liability provisions shall then operate to limit the amount of damages that the buyer can claim. Under contract, damages for a breach of warranty will put the buyer in the position it would have been in if the warranty had not been untrue (ie to repair actual loss). In a share acquisition,...

What are the usual limitations on the warranties in a share purchase or asset purchase transaction?

What are the usual limitations on the warranties in a share purchase or asset purchase transaction? A warranty is a contractual statement or assurance given by the seller to the buyer that a certain state of affairs exists. The warranties in a share purchase agreement (SPA) will cover most areas of the target company/group and it’s business to be transferred and in an asset purchase agreement (APA) will cover most areas of the target business and its assets to be transferred. Should a warranty prove to be untrue, this will give rise to a claim for breach of warranty entitling the buyer to an action for damages against the seller. The warranties have two real purposes—namely, to find out information regarding the target company/group and its business and to impose legal liability for undisclosed liabilities and obligations. The warranties (and, if applicable, representations) in a SPA or APA will typically be stated to be true, accurate and, possibly, not misleading (see clause 8.1 of Precedent: Share...

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Corporate weekly highlights—14 October 2021

This week's edition of Corporate weekly highlights includes (amongst other things) HM Treasury’s decision to launch a review into UK secondary capital raising by publicly traded companies, publication by the Takeover Panel of a statement regarding the creation of a Panel Bulletins page on its website, which contains bulletins on the operation of specific provisions of the Takeover Code, publication by the FRC of guidance for UK Stewardship Code applicants, publication by the CGI of model terms of reference for charities’ remuneration committees and R&I News Analysis regarding a breach of director duties claim.

Corporate weekly highlights—5 August 2021

This week’s edition of Corporate weekly highlights includes (among other things) publication by the FRC of the outcome of its Future of Corporate Reporting consultation, launch by the ISS of surveys on its annual benchmark and climate policy, publication of a report by the CGI suggesting that diverse candidates are excluded from boards and executive committees and News Analysis offering guidance on the application of the principles in Henderson v Henderson in the context of unfair prejudice proceedings.

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