Frequency/market practice: The common cap amount is typically between 10% and 25%. Title to shares is often capped at the amount of the purchase price.
Frequency/market practice: The lower (operational) cap generally applies to operational warranties and damage claims. However, the higher (overall) cap and other limitations typically apply to all claims under the agreement with certain exceptions, such as tax and/or leakage (in the case of locked-box) indemnity claims.
Frequency/market practice: Key warranties (e.g., title), typically, covenants between signing and closing, tax and environmental indemnities and other specific indemnities are excluded from the lower cap but are often subject to a higher overall cap.
Frequency/market practice: A general survival of one full accounting cycle after completion, typically 18 months, is common. There are typically longer periods of three to seven years for fundamental warranties.
Frequency/market practice: Fraud and liability for intentional behavior is carved out and subject to statutory time limitation. Tax is typically subject to a three to six-month limitation period after relevant tax assessments have become final and binding, in some cases combined with a maximum period between five and 10 years. In addition, environmental indemnities and other specific indemnities are typically subject to separate time limitations.
