Insights
M&A: Disclosures Against Warranties
Sale agreements will usually contain a range of warranties by the vendor in favour of the purchaser in relation to the company or business being sold. These warranties are usually subject to a range of limitations (e.g. minimum and maximum claim thresholds and time limitations) and qualifications. One of the common qualifications is to the effect that the purchaser cannot claim a breach of warranty if the vendor disclosed the true state of affairs to
Earn Outs: Failing to Act in Good Faith
When parties can’t agree on a fixed price for the sale of a business, they often use an earn out arrangement whereby some of the price is dependent on how the business performs or whether certain milestones are achieved after the business is sold. Earn out arrangements are usually beneficial to both the vendor and the purchaser. For instance, if the business performs well, that is a good result for the purchaser plus it also
Sale Process: Maximum price requires maximum disclosure?
Shareholder agreements, joint ventures and similar arrangements often contain transfer procedures that are administered by the board of the relevant company as agent for the party transferring its shares or interests. A recent case highlights some of the risks that boards are exposed to when they undertake these roles, particularly in relation to the extent of information that must be disclosed to interested bidders so they can make an informed assessment about whether and how
Inferring Exclusivity in Contracts: More than one way to skin a cat
Commercial agreements often include provisions that give one of the parties exclusive rights to supply the other party’s requirements for particular goods or services. But what if the agreement does not expressly deal with this? Can exclusivity be inferred or implied? A recent case shows that it can. This is an important development because exclusivity is such a key commercial term that it would ordinarily be expressly dealt with in the contract if the parties intended