Warranties and Indemnities

In almost every contract for the sale of shares or a business, the person buying the company or business wants to be sure that it is protected if the seller has not been as accurate about the state of the company or business as they could have been.

To protect the buyer, the seller is asked to provide assurances that the business is in the state that they have represented it to be. These assurances take the form of warranties, which are similar to guarantees.  The seller might warrant that the books and records are up to date and correct.

An indemnity is given where a specific situation is not known at the time of the purchase.  An employee might have a claim against the company but it is not clear when buying how much the claim will be or whether it will be successful. In those circumstances the seller gives an indemnity agreeing to be liable for any losses resulting from the employee’s claim without the amount being known.

At Hart Brown, we will be able to advise you on the implication of any warranties and indemnities and how they will affect the transaction you are agreeing to.

To speak to someone who can advise on warranties and indemnities or any other legal matters relating to your business call, email or request a call back from one of our specialist lawyers.