Warranties: how far do they extend?

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In the recent case of Belfairs Management Ltd v Sutherland, the Court of Appeal examined how far the scope of a warranty may extend.

Invariably, share purchase agreements contain warranties that are used by the buyer to gain assurances about the company he or she is purchasing. The seller must then go through the painstaking process of considering each warranty in detail and make disclosures against the warranties in order to limit its liability to the buyer.

In the above case, Mr and Mrs Sutherland disposed of 60 per cent of their shares in Waveform Solutions (a supplier of communications and information technology solutions) to Belfairs in 2008 for £2m…

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