Careful care should be taken to ensure that documents produced and produced in connection with a sale or business acquisition are carefully complied with for the parties. In reality, it is rare for a buyer to violate a guarantee right due to both the cost of exercising a right to guarantee and the restrictions imposed by the sales contract on warranty rights. Another company held title to the two remaining lands, one of which contained access to the entire site and was therefore essential for its future development (Ransom Land). Although the company was controlled by the defendants, it had its own chain of ownership, which meant that it was not part of the share sales and that the shares were not transferred in accordance with the terms of the G.S.O. Therefore, the land actually acquired by share purchases (i.e. the 4 parcels and not the total 6 with access) was much less valuable. ISSUES WITH SHARE PURCHASE AGREEEMENT (`SPA`) If a seller provides insufficient information, he may find himself at the end of the violation of the warranty rights that he could have avoided. A violation of the right to the guarantee may allow the buyer to recover some or all of the purchase price. The value of the debt depends on the seriousness of the breach of the guarantee and the subsequent loss suffered by the purchaser as a result of the breach. The seller should ensure that all affected staff are consulted to ensure that the information provided is as accurate and complete as possible. Reviews and updates to the disclosure letter often take place until the end. The general statement referred to in paragraph 7 may be deleted if the company to be divested does not have patents or trademarks.
The buyer should be aware that a detailed search can take time and be expensive. Persimmon Homes intended to acquire a six-lot construction area by acquiring the shares held by the companies holding the land. A company that was purchased had a subsidiary that had options to acquire four of the land. Specific information includes not only issues that would constitute a breach of the warranty if not disclosed, but also the required information. B by warranty, for example, „comprehensive information on all insurance policies that are owned by or on behalf of the company and all of which are fully in force and effective.“ The number of the corresponding warranty that is the subject of the specific disclosure must be in the left column. The disclosure file can often be extensive and contain all documents covered in the warranties and/or specific mentions. Two copies of the package must be prepared: one for the buyers and one for the seller. This is a brand new provision of the sales contract, the compensation clause.
If the seller has drawn the buyer`s attention to a particular risk by indicating details in the disclosure letter, the buyer may seek compensation from the seller covering that particular risk. It is often said that compensation is closer to „insurance“ than a guarantee. A right to breach the warranty follows the same rules as any right to infringement: there must be proof of loss and the buyer is required to reduce (minimize) his losses. The disclosure letter is just one example of the absolute requirement that parties to a business sale must have competent legal representation in this process.