Warranties and representations — why it matters
In Sycamore Bidco Ltd v Breslin, the High Court considered whether express warranties in a share sale agreement could also found an action for misrepresentation. Following completion of a share acquisition, the buyer discovered what it considered to be accounting errors in the pre-transaction audited accounts on which it had relied when agreeing the price for the target company.
The share purchase agreement contained warranties relating to those accounts. The buyer sued for breach of warranties and sought damages for misrepresentation on the basis that those warranties were also false representations which had induced it to buy the target company.
Perhaps the most important distinction between warranties and representations is the basis on which damages are measured. A warranty is a contractual statement or assurance given that a certain state of affairs exists. If the warranty is not true, the buyer may have a claim for breach of contract, the remedy for which is damages calculated on the basis of putting the claimant into the position it would have occupied if the warranty had been performed…
If you are registered and logged in to the site, click on the link below to read the rest of the Shoosmiths briefing. If not, please register or sign in with your details below.
News from Shoosmiths
News from The Lawyer
Briefings from Shoosmiths
Careful drafting is usually required for restrictive covenants to be enforceable, although Prophet plc v Huggett provides the exception to the rule.
The Court of Appeal has overturned an earlier decision and ruled that the formal requirements of a break clause must be followed precisely in order to determine a lease.
Analysis from The Lawyer
Compliance and corporate governance codes for large financial institutions will undoubtedly include provisions to regulate high pay in the future
There’s more to the ABS model than attracting the man in the street and procuring external investment. Partners at the big corporate firms, take note…