STOP PRESS: Regulation (EU) 2026/1744 amending Regulation (EU) 2024/1689, Regulation (EU) 2018/1139 and Regulation (EU) 2023/1230 as regards the simplification of the implementation of harmonised rules on artificial intelligence (Digital Omnibus on AI) was published in the Official Journal on 24 July 2026 and entered into force on 27 July 2026. This Practice Note will be updated shortly to reflect amendments to Regulation (EU) 2024/1689, the EU Artificial Intelligence Act. For further information on the changes introduced by the Digital Omnibus on AI, see Practice Note: EU Digital Omnibus—tracker and News Analysis: Digital Omnibus proposal—re-writing the EU's digital rulebook. This Practice Note considers the key legal and commercial issues that can arise in a business-to-business context when drafting and negotiating warranties and indemnities in relation to both standard and off-the-shelf software licences as well as more complex arrangements. For guidance on other key issues affecting software licences, including limitations on liability arising under warranty or indemnity claims, see Practice Note:

An asset purchase agreement will typically include warranties and indemnities given by a seller in favour of a buyer. Why we need warranties and indemnities The starting point for a buyer in any asset purchase transaction is the maxim caveat emptor (let the buyer beware). The buyer will conduct due diligence on the target business so as to learn as much as possible before entering into the transaction. However, the buyer will not be in a position to know exactly what they are buying and therefore must seek protection from the common law position by negotiating appropriate contractual provisions in the form of warranties and indemnities. Without warranties or indemnities, unless the seller has made a misrepresentation in the course of the negotiations, the buyer will have no recourse against the seller. Warranties aim to allocate risk and liability between the seller and the buyer. They also: • allow the buyer to elicit information about the target business through disclosure that will enable the buyer to decide whether to enter into the transaction • encourage the seller to make

A share purchase agreement (SPA) will typically include warranties and indemnities given by the seller in favour of the buyer. Why warranties and indemnities are needed The starting point for the buyer in any share purchase transaction is the maxim caveat emptor (let the buyer beware). The buyer will not be in a position to know exactly what they are buying when they buy a company and therefore must seek protection from the common law position of caveat emptor by negotiating appropriate contractual provisions into the SPA in the form of warranties and indemnities. The buyer will also conduct due diligence on the target company (or target group) so as to learn as much as possible about it before entering into the transaction. For further information on the due diligence process, see Practice Note: Due diligence—share and asset purchases. Without warranties or indemnities, unless the seller has made a misrepresentation in the course of the negotiations, the buyer will have no recourse against the seller should matters concerning the target company prove not to be as they thought. Warranties

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 Warranties • means the warranties[ and representations] set out in Schedule [insert warranties schedule number] and Warranty means any one of them; Warranty Claim • means a claim (for damages, compensation or any other relief) by the Buyer under any Warranty in respect of any event, matter or circumstance which is inconsistent with, contrary to, or involves, relates to or is otherwise a breach of, any of the Warranties and Warranty Claims means more than one of them;  1 Indemnities 1.1 Without limiting any other rights the Buyer may have, including its rights to damages in respect of

Insurance & Reinsurance analysis: Ten years on from the introduction of the Insurance Act 2015 (IA 2015), the Court of Appeal has handed down a significant judgment, addressing for the first time the proper characterisation of warranties and representations under the ‘new’ law. The decision provides an important and helpful insight into the operation of IA 2015 and a reminder to parties that while the Act went some way to balancing the rights of insurers and policyholders, an insurer will still be able to avoid a policy where the policyholder is in breach of warranty. Written by Chris Neilson, partner, Leah Alpren-Waterman, of counsel and Katie Henderson trainee solicitor at Mischon de Reya LLP.

What does this Practice Note cover? This Practice Note explains warrants (sometimes called securitised derivatives) and covers: • what warrants are • types of warrants • key warrant terminology • how warrants are listed and offered • how warrants are documented, and • the differences between warrants and similar instruments What are warrants? A warrant is a tradeable security which gives the holder the right, but not the obligation, to: • buy or sell • a specified asset (the underlying asset or, simply, underlying) • at a specified price (the exercise price or strike price) • on a specified date or dates (the exercise date(s)) A warrant is a kind of derivative—it derives its value from the underlying asset and is a way of obtaining exposure to the value of the underlying asset without owning it. Warrants are sometimes described as 'securitised derivatives'—ie derivatives in the form of securities. A warrant is not a debt security and therefore does not have a principal amount, contains no covenant to repay and does not bear interest. Types of warrants Equity

Also known as share warrants or equity warrants. A certificate or other document that gives the holder the right to subscribe for shares at an agreed price. See also option.

A warranty is a contractual promise or assurance made by one party to another regarding the existence of certain facts or conditions, often relating to the quality or functionality of the subject matter of the contract. Though commonly associated with promises made by sellers of goods, warranties can be made in any type of contract. A warranty is considered a term of the contract that is seen as less fundamental than a condition. Breach of warranty entitles the innocent party to claim damages but does not allow them to terminate the contract.

Insert the following definitions as new definitions into clause 1 of Precedent: Share purchase agreement—pro-buyer—corporate seller—conditional—long form, Share purchase agreement—pro-buyer—corporate seller—unconditional—long form, Share purchase agreement—pro-buyer—individual sellers—conditional—long form or Share purchase agreement—pro-buyer—individual sellers—unconditional—long form (as appropriate): 1 Definitions and interpretation Uninsured Event • means any facts, matters or circumstances giving rise to a breach of Warranty that is not covered under the W&I Policy; W&I Policy • means the warranty and indemnity insurance policy issued to the Buyer covering, in accordance with its terms, the risks arising from any actual or potential breach of the Warranties and claims under the Tax Covenant; Insert the following as a new clause

Insert the following definitions as new definitions into clause 1 of Precedent: Share purchase agreement—pro-buyer—corporate seller—short form or Share purchase agreement—pro-buyer—individual sellers—short form (as appropriate): 1 Definitions and interpretation W&I Policy • means the warranty and indemnity insurance policy issued to the Buyer covering, in accordance with its terms, the risks arising from any actual or potential breach of the Warranties and claims under the Tax Covenant; Insert the following as a new clause immediately following clause 5 headed ‘Seller(s) Warranties’: 6 W&I Policy 6.1 The Buyer: 6.1.1 warrants

Insert the following definitions as new definitions into clause 1 of Precedent: Share purchase agreement—pro-seller—corporate seller—conditional—long form, Share purchase agreement—pro-seller—corporate seller—unconditional—long form, Share purchase agreement—pro-seller—individual sellers—conditional—long form, Share purchase agreement—pro-seller—individual sellers—unconditional—long form or Share purchase agreement—pro-seller—corporate seller—short form (as appropriate): 1 Definitions and interpretation W&I Claim • means a claim by the Buyer under the W&I Policy; W&I Insurer • means the insurer or underwriter issuing and maintaining the W&I Policy and responsible for providing insurance cover in respect of the risks identified in that policy; W&I Policy • means the warranty and indemnity insurance policy issued to the Buyer covering, in accordance with its terms, the risks arising from any actual or potential breach of the Warranties and claims under the Tax Covenant; Insert the following as a new clause immediately following the clause headed ‘Seller(s) Warranties’: 9 W&I Policy 9.1 The Parties acknowledge and agree that the W&I Policy shall be maintained to provide the Buyer with coverage

With the significant rise in the use of Warranty and Indemnity (W&I) insurance in private M&A transactions, lawyers are involved in the stipulation and negotiation of W&I insurance policies. Although the process of structuring and implementing an insurance policy is always tailored to the specific requirements of each deal, the basic structure of the process is similar for all transactions. Against this background, this Practice Note provides guidance for legal professionals in relation to the procurement and negotiation of W&I insurance (the Placing Process) with a particular focus on the documents that are exchanged between W&I insurance brokers and insurers and which must be executed by the insured before the W&I insurance policy incepts. W&I insurance documents Confidentiality undertakings and non-reliance letters The following are standard requirements: • execution of a confidentiality undertaking or non-disclosure agreement (NDA). The W&I insurance broker (Broker) will normally share with the client (or the client’s advisors) a draft NDA in a form that has been pre-agreed with the W&I insurers. It