Can hindsight be used when assessing losses in a breach of warranty claim?

By Jonathan Grigg

In Ageas (UK) Ltd v (1) Kwik-Fit (GB) Ltd (2) AIG Europe Ltd [2014], where Shoosmiths acted for the claimant, the High Court examined principles relevant to the permissibility of using hindsight to value a company for the purposes of a warranty claim.

The case concerned a breach of warranty claim in relation to a share purchase agreement. Ageas entered into the agreement to purchase the full share capital of Kwik-Fit Insurance Services for £215m. Ageas valued the company on the basis of the accounts provided by Kwik-Fit.

Kwik-Fit gave warranties that the audited accounts were prepared in accordance with GAAP, and gave a true and fair view of the assets, liabilities and financial position of the company and its subsidiaries, and that it did not materially misstate the assets or liabilities. At the same time as entering into the agreement, Ageas entered into a warranty and indemnity policy with AIG to protect it against losses resulting from breaches of warranty in excess of a £5m cap…

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