Warranties & indemnities
We advise on warranties and indemnities in business sale agreements, focusing on controlling the scope of liability, managing risk allocation, and ensuring you are properly protected if issues arise after completion.
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How we support you with warranties and indemnities
We advise on warranties and indemnities in business sale agreements, focusing on controlling the scope of liability, managing risk allocation, and ensuring you are properly protected if issues arise after completion.
- Drafting and negotiating warranties and indemnities
- Identifying specific risks that require targeted protection
- Advising on disclosure and its effect on liability
- Negotiating caps, time limits, and liability restrictions
Warranties and indemnities are key tools for allocating risk in a business sale. Warranties are statements made about the business which may give rise to a claim if inaccurate, while indemnities provide specific protection against identified risks.
Their wording, scope, and limits matter. A poorly drafted warranty or indemnity can create uncertainty, weaken protection, or expose a party to wider liability than intended. Disclosure also plays a central role in determining how those protections operate.
We advise on how warranties and indemnities should be drafted, negotiated, and limited so the transaction reflects the agreed risk position and provides clear protection if issues arise after completion.
How we guide you through warranties and indemnities
Warranties and indemnities need to reflect the real risk position in the transaction. We guide you through each stage of the process so liability is allocated clearly and the protections work properly if issues arise after completion.
Identifying the risk areas
We review the transaction and the business to identify where warranties are needed, where indemnities may be appropriate, and which risks require specific protection.
Drafting and negotiation
We draft and negotiate the wording, scope, and limits of warranties and indemnities so the agreed risk position is clear and commercially workable.
Controlling liability after completion
We deal with disclosure, financial caps, time limits, and claim provisions to ensure liability is properly managed and the protections operate as intended after completion.
Key issues with warranties and indemnities
Warranties and indemnities define how risk is allocated in the transaction. The outcome will depend on how they are drafted, what is disclosed against them, and how liability is limited. Precision at this stage is critical.
Scope of warranties
Warranties set out statements about the business. The breadth and wording determine how easily a claim can arise, making it essential to ensure they reflect the actual position and are not unnecessarily wide.
Disclosure against warranties
Proper disclosure qualifies warranties and reduces the risk of claims. Incomplete or unclear disclosure can leave you exposed even where issues were known, so accuracy and detail are critical.
Indemnities and specific risks
Indemnities allocate risk for identified issues on a pound-for-pound basis. They are often heavily negotiated and should be limited to clearly defined risks rather than open-ended exposure.
Limits on liability
Financial caps, time limits, and claim thresholds determine the extent of your exposure after completion. These provisions are central to ensuring liability is controlled and commercially acceptable.
Whatever your situation, our solicitors can provide clear, confidential guidance tailored to you.
Whatever your situation, our solicitors can provide clear, confidential guidance tailored to you.
Warranties & Indemnities FAQs
Answers to common questions on liability, risk allocation, and how sellers can protect their position.
What are warranties in a business sale?
Warranties are statements about the condition of the business given by the seller. If they are untrue, the buyer may bring a claim. Their scope and wording directly affect your exposure after completion.
What is an indemnity?
An indemnity is a promise to compensate the buyer for a specific risk. Unlike warranties, indemnities usually operate on a pound-for-pound basis, making them more direct and potentially more costly if triggered.
How does disclosure protect me?
Disclosure allows you to qualify warranties by setting out known issues. If properly disclosed, the buyer is prevented from bringing a claim on that point, making accurate and complete disclosure essential.
Can my liability be limited?
Yes. Liability is typically limited through financial caps, time limits, and claim thresholds. These protections are negotiated and are critical to controlling post-completion exposure.
How long can a buyer bring a claim?
This depends on the agreement. Warranty claims are usually time-limited, often between 12 and 24 months, while certain claims such as tax may run longer. The agreed time limits are a key part of risk control.
When should these terms be negotiated?
Warranties, indemnities, and limitations should be negotiated during the drafting of the sale agreement. Early legal input ensures these provisions are controlled properly rather than accepted on unfavourable terms.
Clear, structured advice on warranties and indemnities
Warranties and indemnities determine how risk is allocated after completion. Early advice helps you control exposure, manage disclosure properly, and ensure liability is limited to a commercially acceptable position.
Initial assessment
We review the proposed warranties and indemnities to identify areas of risk and ensure the starting position is properly controlled.
Clear next steps
You are given a straightforward explanation of disclosure, liability limits, and how these provisions will affect your position after completion.
Practical drafting and negotiation
We draft and negotiate warranties, indemnities, and limitations to ensure risk is properly allocated and exposure is kept within agreed limits.
Ongoing protection
If you instruct us, we ensure disclosure is handled correctly and liability provisions are enforced so your position remains protected after completion.
There is no obligation. Making an enquiry allows you to understand your exposure early and avoid unnecessary risk.
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