Negotiation of Clauses

Reliance on representations

Buyer would be able to claim under misrepresentation for any representations or statements made in the agreement
Ability to bring a tortious claim (reliance on representations) where damages is more favourable to the buyer and there is the ability to rescind the contract
Tortious damages are to put the buyer in the position he would have been in had the harm not occurred, and do not need to mitigate loss (need to prove inducement and reliance)

Deletion of representations

Buyer accepting that it has not relied on any representations and therefore reducing the ability to bring a tortious claim
Can only bring a contract claim where there is no ability to rescind and there is a duty for the buyer to mitigate their loss and can bring a claim for damages (must be breach and causation) only to put them in the position they would have been in had the contract been properly performed
Better wording for the seller would be to even remove in reliance on the

This is already a compromise, seller has kept in in reliance on and the buyer hasn’t include the phrase and inducement

Only make specific warranties as clear representations and all the rest are contractual terms

Not there

Entire Agreement Clause

Can only claim for misrepresentation on the warranties in the agreement – Entire Agreement Clause
Limiting liability to exclude any outside statements or oral statements

Heavily linked to Clause 18 of the main agreement. If clause 18 if kept in the main agreement then clause 2.5 isn’t so necessary

Not there

Removing Rescission as a remedy

Can only claim for damages rather than claim rescission or termination of the agreement after completion

Jointly & severally

Buyer would be able to sue any seller for the whole amount and not the buyer’s concern how the sellers would sort it out

Removal of Joint & Several and replace ‘sellers’ with ‘warrantors’

Sellers are limiting their liability as the minor shareholders and the trustees are highly unlikely to be willing to be liable for the full amount, but rather only for their amount
Define Warrantors

Sellers cannot really remove joint & several
Deed of Contribution (Side agreement) Limiting liability to the amount of consideration that the sellers themselves received
Cannot advise conflicting sellers

Represent and warrant

Buyer wants the widest possible range of remedies including misrepresentation

Deletion of represent and warrant

Exclude claims for misrepresentation

Put back in and emphasis entire agreement clause

Full and fair disclosure with sufficient details

Achieve high standard of disclosure
New Hearts – want sellers to provide the buyers will all information
Farin – “save as disclosed” – disclosure must be fair, not enough to leave it to the buyer to work it out

Deleted full limiting the extent of disclosure

Deleted with sufficient details and added disclosure bundle

Again limiting disclosure obligations – pushing risk and obligation to review the disclosure bundle on to buyer
Allocation of risk to the buyer
Seller trying to drag the burden of disclosure down to Infiniteland

The word fair has been kept in but the buyer is likely to insist upon full disclosure
Whatever standard of disclosure you agree will be the level that the courts apply -
Buyer should never accept wording less than New Hearts – need FULL, FAIR AND SPECIFIC disclosure

Statements will be true at completion

Protection of buyer in the period of the gap between exchange and completion

Deleted at completion

Shifting the risk back to the buyer
Seller has disclosed against warranties at exchange and buyer entered decision based on what was said and then there is a high risk that something can change in the gap between exchange & completion and seller does not want to be liable for any changes making the same warranties at completion

True accurate and not misleading

Buyer does not want an onerous burden of investigation

True & Accurate is there to flush information out

Deleting misleading and added in all material respects

Shifting onerous burden of investigation on Buyer
Definition of misleading is very vague and subjective which a seller will therefore be highly unlikely to accept

Seller fiercely reluctant to give misleading

Into the Group Companies – disclosure for whole undertaking required

Deleted whole clause attempt to limit scope and extent of disclosure

Assets, affairs and undertakings of whole group needs to be known but most sellers will be highly likely to resist this

Limits qualification on warranties to what has been specifically disclosed in Disclosure letter
Eurocopy – buyer cannot limit actual knowledge to what is disclosed if it is within their actual knowledge as the buyer would have paid the price with that knowledge in mind
If there is actual knowledge there could be a seller...

#3405 - Negotiation Of Clauses Comparison Chart - Mergers and Acquisitions (Private Acquisitions)

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