Stock Purchase Agreement Excluded Liabilities

On the other hand, a seller obviously wants the buyer to take on as much debt as possible, so broader statements about the assumed debts usually favor the seller. Where a seller prefers that a buyer assume some liability, it should add that responsibility to the list of assumed liabilities, rather than excluding it from the list of excluded liabilities, in order to remove doubts as to the ownership of liability. The U.S. Convention provides that the buyer authorizes certain disclosures only with respect to any warranty and insurance against which the disclosure is made. General disclosures are not common and a buyer under a U.S. agreement will generally endeavor to provide in the agreement that certain disclosures regarding all warranties are not treated as effective disclosures unless explicit reference is made to cross-references. Since IBP, Inc. vs. Tyson Foods, Inc. (Del Ch. 15 June 2001), this type of clause is all the more important. In the repurchase agreement, the undisclosed liability stated that IBP had no undisclosed liabilities, “[e]xcept with respect to potential liabilities disclosed [elsewhere] and all other liabilities (in addition to ibps` provision for profits in Q3 2000) related to certain improper accounting practices of DFG Foods, a subsidiary of IBP.” In the rare cases where a buyer can prove that he has actually been led to conclude the agreement by a pre-contractual declaration (which has not been included in the written agreement), he may still have the possibility, under English law, to contest the entire contractual term and a declaration of non-concordation. In Thomas Witter Ltd v TBP Industries Ltd [1996] 2 All ER 573 and EA Grimstead & Son Ltd v McGarrigan [1999] WL 852482, that a clause relating to a “global agreement” does not in itself exclude remedies for false pre-contractual statements and that an admission of indecency may be challenged if the buyer has actually invoked a pre-contractual statement and has thus been induced to conclude the contract.

The declaration should not be the only incentive, but it must have been an incentive that came to the buyer`s mind when he accepted the conclusion of the contract (Edgington v Fitzmaurice (1885) 26 Ch. D 459). MAC clauses, which take the form of a general condition of conclusion, are not common in the UK. When a MAC clause is incorporated into a United Kingdom. The contract of sale is more likely to take the form of a right of termination that can be exercised in circumstances where the seller has caused, by its act or omission, an event that would be materially inconsistent with the warranties if they were considered repeated at closing. With respect to certain categories of liability, buyer wishes to exclude any debt incurred prior to the reference date as well as any debt that is not incurred in the normal transaction, including liabilities that seller must assume. In addition, a broad tax exclusion is in the best interest of the buyer in order to protect him from the tax liability that will succeed him. In addition, liability for transaction-related costs (i.e. intermediation fees) to be paid by the seller is generally excluded. The practice and mechanism of disclosure in the United Kingdom. . .


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