Representations And Warranties In A Share Purchase Agreement

Differences of opinion in the doctrine on the results of representations and guarantees in share purchase contracts should be taken into account by the development of provisions relating to the results of representations and guarantees. It is therefore important that the violation of relevant insurance and guarantees in the context of share purchase contracts be detailed in order to achieve the real will of the parties. Representations and guarantees can often be confused, not least because the standard wording of a number of contracts applies to the same clauses. However, it is not always clear that representation is also a guarantee. An important distinction should be made, however, because the remedies that exist between individuals are very different. The “Insurance and Guarantees” section of the sales contract is one of the most frequently negotiated sections of an agreement between a buyer and a seller. It includes factual assertions and promises about what is being sold. The seller will make several insurances and guarantees on the objective and assets. However, as has already been said, since the objective of buyers with a share purchase contract is generally the acquisition of companies from the company to which the shares belong, the qualifications for the company and its activities are also of paramount importance to the buyer. The share purchase contracts therefore contain a large volume of insurance and guarantees from the seller. The scope of these representations and guarantees depends on the interests of the parties and the agreement reached3. The legal consequences of the breach of insurance and the guarantees provided by the agreements differ depending on whether the purchaser has performed due diligence on the legal, economic, fiscal and various aspects of the target company and the shares subject to sale.

The High Court concluded that no statement had actually been made and that there could be no misrepresentation. In the Tribunal`s view, the relevant statements in the GSO have always been characterized as “guarantees” and not insurance, but furthermore, the proposition that representation could be included in a contract did not work – a misrepresentation should include the presentation before the contract date and not in the contract. However, the right to breach the guarantee was maintained because the accounts had actually been raised, so that there was no real and fair view of the state of the situation and they were deviated from GAAP. The damage caused by the breach of the warranty was therefore assessed, on the basis of damage, as a differential difference between the price paid at the close and its actual value.