Q&As

What is the meaning of the expression ‘so far as the seller is aware’, ‘to the seller’s best knowledge, information and belief’ (or similar expressions) where used to qualify warranties in a share purchase agreement or asset purchase agreement?

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Produced in partnership with Hannah Laithwaite of Lamb Chambers
Published on LexisPSL on 05/05/2017

The following Corporate Q&A produced in partnership with Hannah Laithwaite of Lamb Chambers provides comprehensive and up to date legal information covering:

  • What is the meaning of the expression ‘so far as the seller is aware’, ‘to the seller’s best knowledge, information and belief’ (or similar expressions) where used to qualify warranties in a share purchase agreement or asset purchase agreement?
  • The need for warranties
  • Knowledge qualifiers
  • Defining what is meant by ‘to the seller’s best knowledge’
  • The corporate seller
  • Breach of warranty

What is the meaning of the expression ‘so far as the seller is aware’, ‘to the seller’s best knowledge, information and belief’ (or similar expressions) where used to qualify warranties in a share purchase agreement or asset purchase agreement?

The need for warranties

In a share or asset purchase, there is no statutory or common law protection as to the assets and liabilities being acquired. The practice of building in robust warranties into any contract to protect a buyer is therefore commonplace, as are attempts by sellers to limit their liability under the warranties.

One method of limiting liability under a warranty or representation is to qualify the knowledge which the seller is deemed to have within the transaction, on the basis that it cannot be expected to disclose matters which it does not know about. A buyer will, however, typically resist such qualification for the majority of warranties (unless the seller is a trustee, administrator or similar, or perhaps in an auction sale process heavily weighted towards the seller).

Knowledge qualifiers

Common examples of knowledge qualifiers within a warranty for a share or asset purchase are the inclusion of terms such as ‘to the seller’s best knowledge’, ‘so far as the seller is aware’ or ‘to the best of the seller’s knowledge and belief’. A number of the warranties in our Precedent share purchase agreements and asset purchase

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