Co-Author by Sun Ran
Introduction
Warranties and indemnities are forms of contractual protection
provided by a seller in a sale and purchase agreement. In agreeing
to make the acquisition and in agreeing to the purchase price, the
buyer will inevitably have relied upon information provided to him
by or on behalf of the seller and on various assumptions. In most
transactions, the buyer will insist upon the sale and purchase
agreement containing warranties and/or indemnities regarding the
shares and the underlying business and its assets and liabilities,
in order to compensate him if the information or the assumptions on
which he is relying prove to be incorrect. This article discusses
the key differences between warranties and indemnities in relation
to the sale and purchase of shares. It is crucial to seek the most
appropriate form of contractual protection as a buyer.
