Contribution agreement: share purchases

by Practical Law Corporate

A standard document providing a contribution agreement for use in a share purchase transaction governed by the law of England and Wales involving several sellers. This document offers a framework for sellers who have given warranties or indemnities on a joint and several basis under a share purchase agreement (SPA) to apportion liability between them. When liability is joint and several, a buyer can pursue any one seller for the full amount of a claim, regardless of that seller's individual fault or shareholding. This document is designed to regulate the sellers' relationship by contractually apportioning liability for such claims among them, typically according to an agreed proportion. It establishes a mechanism for handling claims and contributions, offering a more certain alternative to relying on the statutory rights available under the Civil Liability (Contribution) Act 1978. This document also outlines procedures for the conduct of claims, including the appointment of legal advisers and the process for settling or defending actions.