Seller protection: limitation of liability: share purchase agreement

by Practical Law Corporate

Standard clauses providing a seller-protective framework for limiting liability in a share purchase agreement (SPA) governed by the laws of England and Wales. The clauses address the scope and extent of a seller's post-completion exposure to warranty claims, indemnity claims and claims under a tax covenant. Key provisions include imposing financial caps on liability, setting de minimis thresholds and baskets for claims, and establishing time limits for claim notification and progression. These clauses also feature an entire agreement clause designed to restrict remedies for misrepresentation and limit reliance on pre-contractual statements. Further, they contain important limitations relating to matters disclosed, the buyer's knowledge and liabilities provided for in company accounts. Provisions governing recovery from insurance or third parties, the impact of changes in law and the conduct of third-party claims are also included. The integrated drafting notes offer guidance on negotiation points and the practical application of the limitations.