Limitations on liability
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Limitations on liability Start Comparison
What is the common cap amount (as a percentage of purchase price)?

Frequency/market practice: 10%–30% for general cap. Key warranties may be subject to a different, greater cap than the general cap. Specific indemnities are usually capped at 100%, and sometimes not capped.

Does the cap (and other liability limitations) apply to the whole agreement or just warranties (or particular terms)?

Frequency/market practice: Usually warranties only.

What are the common exceptions to the cap?

Frequency/market practice: Key representations and warranties often excepted (e.g., title, ownership, authority, good standing, etc.) Often tax and specific areas of concern (treated as specific indemnities) depending on key findings in due diligence also expected with specific, separated caps or no cap.

Is a deductible or basket common?

Frequency/market practice: Both common (50/50).

Is a de minimis common?

Frequency/market practice: Fairly common.

How long does seller liability survive?

Frequency/market practice: From 12–36 months for general representations and warranties.

Are there any common carve-outs from limitation on seller liability (e.g., fraud, tax, key warranties)?

Frequency/market practice: For tax, social security and environmental matters or key representations and warranties/specific indemnities for which the statute of limitations usually applies (+x months). Exception for breach of competition laws/compliance matters to be considered.

Is warranty insurance common?

Frequency/market practice: Rarely, but more and more frequent.